NIC Bank to take over staff and branches of Imperial Bank

Central Bank Governor Patrick Njoroge. The CBK has appointed NIC Bank to manage assets and liabilities of the troubled Imperial Bank. (PHOTO:FILE/ STANDARD)

The Central Bank of Kenya has appointed NIC Bank to manage assets and liabilities of the troubled Imperial Bank.

The deal will see the lender take over staff and branches of Imperial Bank, which is under receivership.

Central Bank of Kenya (CBK) Governor Patrick Njoroge said he and the Kenya Deposit Insurance Corporation (KDIC) endorsed the joint agreement with NIC Bank Ltd (NIC), which was effected yesterday. Dr Njoroge said NIC Bank will assume some deposits and assets of Imperial Bank Ltd (IBL).

Njoroge also expects depositors of the troubled bank to be granted access to their accounts in a structured manner under the new arrangement.

“NIC will also disburse on behalf of KDIC a maximum of Sh1.5 million each to the remaining IBL depositors, as soon as the High Court’s suspension of payments to IBL depositors is lifted, and subject to account and identity verifications that were conducted previously,” the CBK said.

Once completed, 45,700 depositors (equivalent to 92 per cent of depositors) will have been paid in full or not claimed their balances of less than Sh2.5 million.

The new consultant, NIC, is expected to make payments from July 4 when the CBK expects the court to lift a moratorium.

“NIC will assess the quality of assets and liabilities of Imperial Bank. It will also support the recovery of IBL loans,” Dr Njoroge said. Under this new arrangement, NIC Bank will also provide guidance on other assets and staffing of the bank.

“Imperial has about 470 employees at the moment. Others have left. It has 28 branches and they will be taken over by NIC,” explained Dr Njoroge.

The deal will also see NIC assume a portion of the remaining verified deposits of the troubled bank along with certain other assets and liabilities in an arrangement entered with KDIC.

Imperial Bank was placed under receivership late last year after a forensic audit by FTI Consulting revealed shocking details of how eight members of one family that largely deals in the fish business conspired with the bank’s top managers to siphon Sh38 billion from the bank, making it one of Kenya’s biggest bank scandals.

A High Court ruling on the suspension of payments is expected on July 4, 2016. Imperial Bank had about Sh87billion in assets by the time it was put under receivership. About Sh7billion was paid out in the first phase of the payout which was done by Kenya Commercial Bank (KCB) and Diamond Trust Bank (DTB). From the remaining Sh80billion, about Sh11billion is yet to be verified.

The CBK said its latest action was taken to safeguard the interest of IBL’s depositors and creditors, and in the wider public interest. The regulator said  Imperial bank shareholders had failed to raise Sh10billion to help revive the bank.

“This follows the failure of IBL’s shareholders to provide adequate assurances to implement a proposal that would enable the prompt reopening of IBL and resumption of normal activities for its customers,” the CBK said.