Authorities will, in a fortnight, reveal the fate of troubled Imperial Bank, which the Central Bank of Kenya (CBK) put under its management last week, the Nation has learnt.
National Treasury Cabinet Secretary Henry Rotich made the revelation as he reassured Kenyans that the country’s banking sector was “safe and sound” despite the “isolated” crisis facing the bank.
“Imperial Bank is a special and isolated case and there should be no cause for alarm among Kenyans on the financial health of Kenyan banks,” said Mr Rotich.
EXPEDITE RESOLUTION
Imperial Bank customers have in the last several days since the lender went under, expressed pain and anger at having their deposits locked in.
The bank, which has 28 branches in Kenya and five in Uganda held Sh58 billion in customer deposits as at the end of June.
“The relevant authorities will expedite the resolution of the crisis facing Imperial Bank because it is in the interest of everyone, including the regulator, the bank’s customers and the larger industry, that this matter is resolved expeditiously,” said Mr Rotich.
The Nation has since learnt that the Kenya Deposit Insurance Corporation (KDIC), in conjunction with CBK, will devise the appropriate courses of action for the bank going forward.
ALTERNATIVE POLICY OPTIONS
The regulator is faced with three options. The first is capital injection, restructuring and reopening of the bank. Sources at CBK have since told the Nation that shareholders of the lender prefer this route as they do not want the bank closed permanently.
“Already they are willing to inject capital from within so that the bank, which they feel has a promising future with a 2 per cent market share and an excellent branch network, does not go under,” said a source at CBK on condition of anonymity.
The second option could see the bank sold in part or wholly.
The third, which would be the most drastic, and according to rising consensus among industry analysts and sources at the regulator, includes liquidation of the bank. In the event that the bank is liquidated, customers will be paid insured deposits, and any balances once assets are sold and debts are collected through the liquidation process.
ACCESS DEPOSITS
The reopening option will allow customers to access their deposits and resumption of normal business while liquidation will allow customers to immediately access insured deposits only and anything else through the liquidation.
The industry is keenly watching to see how the regulators decide on the delicate issue.
By BRIAN NGUGI
