Court stops dissolution of Dubai Bank

The dissolution of Dubai Bank has been stopped after the High Court ruled that the Central Bank move to wind up the lender was premature.

Justice Eric Ogola Wednesday ruled that the CBK’s decision to liquidate Dubai Bank only 10 days after placing it under receivership was unreasonable.

The judge said the banking regulator knew that Dubai Bank was ailing and should have stepped in to solve its problems before ordering its winding up.

CBK ordered Dubai Bank’s liquidation in August after an audit report showed that it was in gross violation of industry regulations that could expose depositors to a loss of over Sh1.7 billion.

Secured buyer

The regulator tasked the Kenya Insurance Deposit Corporation (KDIC) with Dubai Bank’s winding up.

Supplies company Richardson and David moved to court to stop the dissolution. The firm adds that the troubled lender has secured a buyer from the British Virgin Islands that is ready to inject $21.5 million (Sh2.2 billion) into Dubai Bank.

READ: Virgin Islands investor seeks to hand Dubai Bank a Sh2.2bn lifeline

“The decision to liquidate Dubai Bank after 10 days is unreasonable action by CBK. Its supervisory powers have been abused. CBK is obliged to consider proposals for injection of capital. Hassan Zubeidi has deponed to a proposal to inject capital,” the judge ruled.

SOURCE: BUSINESS DAILY