KCB Group scoops a slice of Imperial Bank deposits, loans

Friday, August 30th, 2019 00:00 |
KCB Group Chief Executive Officer Joshua Oigara (right) and Kenya Deposit Insurance Corporate Chief Executive Officer Mohamud Mohamud with during a joint press conference on the acceptance of the revised final offer from KCB yesterday. Photo/PD/ALICE MBURU

Kenya Commercial Bank (KCB) Group has completed the process of verifying Imperial Bank (in receivership) assets and will take over 7.5 per cent of collapsed lender’s unpaid customer deposits.

More Imperial Bank depositors now have hope of accessing their funds, which by the time the bank collapsed had verified Sh27 billion, with the lender having reported total customer funds at Sh87 billion.

The deal, which will see KCB slice part of Imperial Bank’s loan book, also unlocks first tranche payment once approvals are made in accordance to the April 2019 structured agreement.

This is part of ongoing transfer of assets of the troubled lender to the Nairobi Securities Exchange-listed bank, whose assets include five branches.

Imperial Bank was placed under receivership on October 13, 2015, after it lost Sh34 billion through fraud.

Kenya Deposit Insurance Corporation (KDIC) chief executive Mohamud Ahmed Mohamud said KCB’s move would increase total deposits availed to Imperial Bank customers to 40 per cent, without putting into consideration 50 per cent of current loan balances which are linked to ongoing litigation.

He said this means about Sh13 billion would be paid by KCB. “Upon completion, KCB will make payments to the depositors as detailed in their earlier proposal of April 5,” he said.

KCB Chief Executive Joshua Oigara said their main job in the deal has come to an end. “This is a way of saying that we shall be able to take some of the assets,” he said, adding that KCB shall be liable to pay in line with the April 2019 agreement.

First anniversary

Oigara said deposit payments will be made at 12.5 per cent on completion of signing of the agreement; 12.5 per cent on the first anniversary of the signing; and 25 per cent each on the second, third and fourth anniversaries respectively.

In December 2018, Central Bank of Kenya (CBK) and KDIC released funds that increased total recovery to approximately 35 per cent of the original eligible deposits held on receivership of Imperial Bank.

Mohamud said the move enabled approximately 92 per cent of eligible depositors granted full access to their bank balances with funds being released in three tranches.

However, a significant portion of Imperial Bank’s assets and liabilities are tied up in lawsuits and will remain with the KDIC.

KDIC said yesterday that it would ontinue to pursue outstanding loan balances for the benefit of depositors and creditors while collaborating with KCB and other financial institutions to authenticate and consider uptake of the remaining loan assets to enhance further recovery.

“We are also open to other financial institutions so that we can increase deposits access,” said Mohamud.

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