Ugandan shares in Imperial Bank sold for Sh680m

The Central Bank of Uganda sold shares held by Imperial Bank Kenya for Sh670 million. The Central Bank of Kenya (CBK) says that the Kenya Deposit Insurance Corporation (KDIC) will, however, only receive about half the amount.

“These shares in Imperial Bank (Uganda) Ltd were sold to Exim Bank (Uganda) Ltd for the sum of $6.788 million (Sh689 million) in an effort to quickly recover funds for the benefit of all Imperial Bank depositors. Net of inter-bank deposits and other transaction costs, the amount due to KDIC is $3.685 million (Sh374 million),” the CBK said in a statement yesterday.

“Imperial Bank Kenya had a 58.6 per cent stake in the Ugandan outfit, which was sold to Tanzanian bank Exim on Monday. “Since October 13, 2015, when CBK placed Imperial Bank Ltd (IBL) under receivership, the CBK and KDIC have been working closely with Bank of Uganda (BOU) on an appropriate solution to these shares,” the statement reads.

“CBK is very supportive of BOU’s actions, exercising its statutory powers as the regulator in that jurisdiction and seeking an outcome that does not jeopardise financial sector stability.”

The statement said that the CBK and KDIC continue to work with all concerned parties towards an expeditious solution for IBL. “In particular, work by forensic auditors and other investigative agencies is ongoing, with the objective of protecting the interests of IBL depositors, facilitating the quick recovery of funds and protecting the financial sector,” the statement adds.

Exim Bank also has operations in Djibouti and the Indian Ocean island state of Comoros. The sale is, however, far below projections by an audit firm, FTI Consulting, which had indicated that the bank could recover Sh1.25 billion.

Imperial Bank had invested Sh858 million in the Ugandan subsidiary as at 2014 when the unit had gross assets of Sh7.9 billion.

The sale now marks the end of Imperial Bank’s operations in Uganda, and comes at a time when the lender’s shareholders are fighting to stop CBK from winding up the Kenyan unit. Imperial Bank of Kenya was put under receivership last year by CBK after it emerged that the lender had lost over Sh38 billion of depositors’ cash in a long-running scam.

This saw BoU take over the management of IBL Uganda, before putting up the stake for sale.

The Ugandan regulator said IBL Uganda has now changed its name to Exim Bank (Uganda) and appointed a new board of directors. BoU said in the statement that operations and services of Exim Bank (Uganda) would continue normally.

But unlike its Ugandan counterpart, CBK has chosen a different path. After putting Imperial Bank under receivership, it started a process of paying small depositors. Shareholders are worried that the process will eventually result into liquidation, fears that have seen them rush to court to block the move.

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