Imperial Bank owners and CBK feud over reopening delays

Imperial Bank shareholders have blamed Central Bank of Kenya (CBK) over the delayed reopening of the closed bank, days after the regulator accused them of inaction.

The shareholders accused CBK and Kenya Deposit Insurance Corporation of failing to follow up the proposed restructuring plan thus delaying the reopening. The shareholders said further delay would derail the recovery plan.

“The plan calls for the appointment by KDIC of an independent professional firm to undertake a comprehensive due diligence into the affairs of IBL which would include ascertaining conclusively the size of the funding gap.

To our knowledge this has not been conducted so far,” said the shareholders in a rare statement targeting the regulator.

Previously CBK has announced the hiring of forensic auditor FTI Consulting — earlier hired by the board to reveal multibillion parallel lending scheme — from America to comb through the bank’s books, which pokes holes into the shareholders’ claim to not knowing about hiring of an independent firm to do a due diligence on the company. The result of FTI second audit could have informed the CBK delays.

The regulator had two weeks ago accused the shareholders of not being fully committed to the restructuring process. The owners also accused KDIC of failing to appoint a team of restructuring experts to develop and implement the revival plan.

The two parties are said to differ on the capital needed to reopen the bank closed six weeks ago with CBK asking for a Sh40 billion injection while the shareholders are only willing to put in Sh10 billion.

The regulator and owners of Imperial are also tussling on ownership of the recovery plan with the shareholders saying they presented an initial revival plan to CBK on October 29 after the closure, before presenting revised plans on November 3 and another on 11.

CBK had issued a press statement on October 27 stating it had presented a recovery strategy to the shareholders who had requested for time to go through the plan.    

“The shareholders have formed a steering committee comprising leading Kenyan banking, legal and finance professionals to guide the reopening process of the bank. The steering committee has yet to be engaged by CBK or Kenya Deposit Insurance Corporation (KDIC),” said the shareholders in a statement.

READ: Ex-Imperial Bank boss’ family hits back at CBK

Central Bank governor Patrick Njoroge had hoped to reopen the bank, closed on October 13 on discovery of massive fraud, before the end of this month. This target seems unrealistic with recent happenings.

The blame-game will dent depositors’ hopes of accessing their savings soon while reigniting memories of previous bids by the Central Bank to revive collapsed lenders which were frustrated by unwilling directors.

Revival plan of Trust Bank collapsed following failure by the directors to repay some of the fraudulent loans disbursed to them.

Shareholders of Imperial Bank have, however, claimed they were in the dark about the fraud in the bank and only learnt about it after the death of long-serving chief executive Abdulamek Janmohammed.

Directors of the bank reported the fraud to Central Bank of Kenya on October 12 leading to the closure the next day. Janmohammed had been at the helm of the bank since its formation in 1992 with the fraud said to have been going on over a 13-year period.

SOURCE: BUSINESS DAILY