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Relief as Imperial Bank depositors start receiving funds

NEWS
By Kagure Gacheche | December 12th 2015

The Kenya Deposit Insurance Corporation (KDIC) has started making payments to depositors of the troubled Imperial Bank through Kenya Commercial Bank and Diamond Trust Bank.

This comes barely nine days after the Central Bank of Kenya (CBK) released a statement saying it had selected the two lenders as its agents in disbursing the funds after it became clear that Imperial Bank was unable to resume normal operations any time soon.

“Payment to a number of validated claim forms have been initiated this morning and dispatched to KCB and DTB, who will contact the particular depositors to visit their respective branches in order to receive payments,” KDIC said Friday.

Additional payments are expected to be released on a daily basis to the two banks for forwarding to depositors whose claims have been validated. The validation process is expected to take three days.

The payout plan will see 44,300 – or 89 per cent – of Imperial Bank customers access their full savings, while 5,700 depositors will only access up to the maximum Sh1 million currently being paid out. CBK said it would release a payment plan for these large depositors in March, as well as for investors who took up the bank’s Sh2 billion bond issued in October.

CBK and Imperial Bank shareholders have been unable to agree on a restructuring plan that would see the lender reopen, though customers with loans are expected to continue making repayments.

Imperial Bank was put under KDIC’s management on October 13, with an audit of its accounts showing the lender’s former managing director had orchestrated the fraudulent cover up of off-book lending of Sh38 billion.

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