CBK seeks improved Imperial Bank offer

Imperial Bank head office at westlands. [PHOTO:BEVERLYNE MUSILI]
Kenya Commercial Bank is being persuaded to improve its offer in its quest to acquire Imperial Bank’s assets, according to the Central Bank of Kenya (CBK).

CBK Governor Patrick Njoroge yesterday said the regulator and Kenya’s biggest lender by assets were still in negotiations, trying to crack a deal that would end a three-year wait by depositors to access their cash. 

Imperial Bank went into receivership in October 2015, but no solution has been found despite numerous promises in the recent past that the matter is nearing conclusion. 

“We are working with KCB’s proposal to improve it. Once we get the offer, we will review and see the appropriate criteria on how to deal with it and whether it is a good offer for depositors,” said Dr Njoroge at a briefing in Nairobi.

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“We intend to bring the deal to completion and there is no lack of courage on our part.” 

The Governor at the same time dismissed claims that ongoing investigation into Deputy Chief Justice Philomena Mwilu’s dealings with the collapsed bank were likely to impact the sale of its assets to KCB.

Investigators at the Directorate of Criminal Investigations (DCI) have accused the Deputy CJ of using her position to illegally obtain Sh12 million from Imperial Bank between August and October 2013. She, however, claims the money was an unsecured loan.

The case ropes in Imperial Bank following requests to substitute land parcels used as collateral, which was approved by Kenya Deposit Insurance Corporation (KDIC).

“We cannot comment on the DCI case, everyone understands that it is a judicial process that is still ongoing,” said Njoroge.

The Governor, however, said the KCB carve-out deal was not in any way linked to the case and would proceed as planned.

He said the deal would be based on the same model as the Chase Bank resolution, where the State Bank of Mauritius was allowed to buy a 75 per cent stake in the struggling lender’s good books last August 17.

The move saw a Sh26 billion spike in non-performing loans, half of which were acquired by the Indian Ocean island lender. CBK now says SBM will endeavour to resuscitate the bad books. Njoroge, however, declined to discuss the terms of the deal, as the finer details are still being worked on despite the fact the 70-day receivership extension ends in two weeks.

Meet depositors

This was the fourth time Imperial Bank receivership is being extended. In August last year, the High Court granted both parties one-year extension period to enable the regulator to seek a potential strategic investor.

The Governor said he would meet depositors at various points of the deal and update them on progress made.

KCB boss Joshua Oigara, during the announcement of the bank’s half-year results, said it might take up to 90 days to conclude the deal on the structure of the sale and a further nine months to close it given Chase Bank’s experience.

“The resolutions depend on Central Bank of Kenya and Kenya Depositors Insurance Corporation,” he said.

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Kenya Commercial BankImperial BankCentral Bank of KenyaCBK Governor Patrick NjorogeDirectorate of Criminal InvestigationsDeputy CJustice Philomena Mwilu