Depositors to wait for years as Imperial Bank is wound up
Over 4,300 depositors will wait for years before getting part of their money stuck in Imperial Bank after the Central Bank of Kenya sanctioned the liquidation of the ill-fated lender.
Kenya Deposit Insurance Corporation (KDIC) said the liquidation will involve getting Imperial bank borrowers to pay up their loans in order to realize assets for depositors and creditors.
Imperial Bank, which collapsed six years ago, has seen most of its assets paid off to depositors while under receivership.
CBK said following four disbursements, 45,700 out of the 50,000 (92 percent) depositors have accessed their funds in full.
The liquidation of Imperial bank now sets the stage for realizing the bank’s remaining assets for distribution among roughly 4,300 depositors, creditors, and bondholders.
“The branches were rented so the assets of the banks are the loans which will be used to pay the remaining creditors,” KDIC Chief Executive Officer, Mr Mohamud Ahmed Mohamud, told Business Daily.
Imperial Bank collapsed six years ago with depositors’ cash, bondholders’ investments, and creditors’ money.
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During the six years, most of the money has been used to pay depositors including the sale of Kes3.2 billion assets and liabilities to KCB Bank last year.
The collapse left a tale of woes by depositors, who lost money meant to run their businesses, pay school fees, and some who died because they could not raise funds for medical attention.
Several companies such as utility Kenya Power, the National Social Security Fund, and insurers Sanlam, and CIC all lost part of their deposits in Imperial Bank.
Further, fund managers, corporate and retail investors, who lined up to give Imperial Bank Kes2 billion in a five-year bond have also lost their money.
Resolving the lender has been a long-running problem for the CBK until it managed to sell part of the assets and liabilities to KCB.
Besides KCB the only firm to show interest in resolving the lender has been a Canadian private equity fund Amassment Corporation, which sought to buy assets of the collapsed bank granting depositors of Kes49 billion, in preference shares in NewCo limited, a special purpose vehicle holding Imperial bank assets.
The preference shares would then earn unspecified yearly dividends for income made from recoveries of the loan assets while the company retains some of the revenues for growth and buying future loans.
The vulture fund said that for depositors, who would want to liquidate their stake in the future, they would have the option of selling off through a private placement or exit once the company is listed on a public stocks exchange platform.
Former shareholders had also offered to pump in Kes10 billion to save the lander before collapsing under a deal where all account holders would have received liquidity of up to Kes1 million immediately upon reopening.
Then between November 2015 and March, 2016 shareholders would pump in Kes10 billion in exchange for Class A shares.
