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Regulator says sale of Imperial to KCB almost done deal

By Otiato Guguyu | Published Sat, September 1st 2018 at 00:00, Updated August 31st 2018 at 23:31 GMT +3
Imperial Bank head office in Nairobi’s Westlands. Depositors have been unable to access their money since October 2015 when the lender went into receivership. [File, Standard]

The sale of Imperial Bank assets to Kenya Commercial Bank (KCB) has entered the homestretch.

According to a communication to depositors from their representatives earlier this week after meeting Central Bank Governor Dr Patrick Njoroge, talks with a view to reaching a final deal soon are ongoing behind closed doors.

“We asked the governor to expedite the EoI (Expression of Interest) process and work with KCB to get the best payout in the shortest time possible for the depositors,” reads part of the communication.

The Governor is, however, said to have declined to discuss the terms of the deal as the finer details are still being worked on.

The conclusion of the sale deal offers hope to the long-suffering depositors who have been unable to access their money for close to three years now after the ailing lender went into receivership.

This is despite Dr Njoroge recently telling a depositors’ meeting to brief them on the progress of the proposed sale that pending court cases against the bank would have to be resolved first.

Even as the sale deal nears conclusion, details have emerged of how the bank owners walked into Central Bank dangling a secret deal in an attempt to save the lender back in October 2015.

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The owners are said to have discovered the fraud after the collapse and death of former chief executive Abdulmalek Janmohamed and called in US consulting firm FTI to design a sweetheart dealbefore approaching the regulator and reporting the Sh33 billion hole.

Under the deal, all account holders would have received liquidity of up to Sh1 million immediately upon reopening. Then, between November 2015 and March 2016, shareholders would pump in Sh10 billion in exchange for Class A shares.

By November 15, 2015, the Ugandan subsidiary would have been sold off to bring in Sh1.25 billion, with a strategic investor lined up by December of the same year. They were expected to pump in some Sh12.5 billion into the ailing lender.

The next day, Sh11.8 billion would have been recovered from fraudulent transactions in terms of an asset back loan. W E Tilley, which was involved in the fraud, had agreed to collateralise Sh10 billion of loans using assets.

Depositors, bondholders and subordinated debt would then have contributed Sh20.4 billion in  Class B shares which would then be redeemed from recovery proceeds, new capital injections, salesand retained profits.

“The balance of the deposits will be turned into medium-term fixed deposit receipts (FDRs) repaid with varying maturities – 20 per cent with a 12-month maturity, 40 per cent with a 24 month, 40 per cent with a 36-month maturity,” the document seen by Weekend Business shows.

 


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