Farewell Dubai Bank

Kenya’s smallest bank Dubai Bank was placed into receivership about two weeks ago. It took control and suspended all operations of the bank except to ask borrowers to continue servicing their loans.

A few days after taking charge, the Kenya Deposit Insurance Corporation  (KDIC) as receiver revised its role and announced that Dubai bank would be liquidated, with each depositor paid a statutory maximum of Kshs 100,000 (~$1,000) once they file a claim that’s proven, and any larger deposit customers  would share in the proceeds of the liquidation equitably.

In the past, banks that have been put into receivership rarely ever come back. From Euro Bank, Daima Bank, and even a (strong) Charterhouse Bank never reopened their doors after receivership. This is because banking relies on trust and confidence, and if the public has no faith in an institution, it’s difficult for it to operate, attracting deposits from customers, and entering into settlement transactions with other banks.

4 thoughts on “Farewell Dubai Bank

  1. Beth

    Would loan defaulters in a fallen bank have their names forwarded to the CRB? What happens if a borrower also had more deposits than he had borrowed, and more than the statutory KES 100,000 due to them after the collapse? Would you just get 100K only and continue servicing the loan?

  2. Shiroh

    Were there any reasons given for why the bank was put in liquidation. Is this a sign to come. Also, isn’t the Central Bank monitoring banks every day to make sure this does not happen?

    1. bankelele Post author

      CBK monitors banks, querying the banks performance, non-perfuming loans, insider borrowing, etc. They internally issue warnings, make recommendations/directives to the bank board & management, and fine banks for non-compliance. But in Biz. Daily today, it seemed that other banks stopped trading with Dubai, and once they lose confidence, that’s it.

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