CBK & KDIC To Pursue Outstanding Loan Balances In Imperial Receivership Recovery

In December last year, the Central Bank of Kenya and Kenya Deposit Insurance Corporation announced the release of funds increasing a total recovery to approximately 35 percent of the original eligible deposits held at the date of the receivership of Imperial Bank Limited. This saw approximately 92 percent of eligible depositors granted full access to their bank balances with funds being released in three tranches.

April 5, this year saw CBK and KDIC announce the acceptance of KCB Bank’s final offer in its quest to enhance recovery of depositors in the defunct Imperial Bank. In letters dated March 29 and April 2, 2019, KCB communicated to CBK and KDIC a modification of the terms of the Binding Offer with respect to the completion of the verification of the loan process.

Release Of Funds

Funds were previously made available in three tranches, and approximately 92 percent of eligible depositors had been granted full access to their balances.

The accepted Final Offer includes a further recovery of 19.7 percent of eligible depositor balances remaining at IBLR.
KCB conducted intense due diligence and has since revised the final offer to a take-over of 7.5 percent of the outstanding deposit balance, translating to a total recovery rate to the depositors of 38 percent. This recovery does not include 50 percent of the current loan balances linked to ongoing litigation.

Upon completion of the transaction, KCB will make payments to the depositors as detailed in their earlier proposal of 5th April 2019. KDIC and CBK undertake to continue pursuing the outstanding loan balances for the benefit of depositors and creditors. In addition, the two institutions will collaborate with other financial institutions to authenticate and consider the uptake of the remaining loan assets to enhance further recovery.

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Going forward, KDIC in conjunction with CBK and National Treasury should put in place effective resolution mechanisms to prevent and negotiate bank closures and in the unlikely event a problem arises, such a matter be resolved within the shortest time possible.

Gathoni Kuria

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