The Central Bank of Kenya (CBK) is set to begin searching for a new investor to take over Imperial Bank, a move that could see the bank’s customers wait longer to receive their funds.
The decision comes less than 14 days to the receivership’s expiry date which means the CBK will have to seek a further extension of the receivership from the High Court. The receivership is presently in its third year. According to Money & Markets, the reason behind the central bank’s decision is unclear.
Seeking a New Investor
The decision to begin the process again could mean that the KCB Group and Diamond Trust Bank proposals were rejected. The central bank also rejected a bid from SBM Bank to resuscitate Imperial Bank.
The bids from these banks could have been rejected based on possible involvement in the fraud that placed Imperial Bank under receivership. For instance, depositors’ funds were moved from Imperial Bank through Diamond Trust Bank.
At the same time, interested parties hope that the second round will be much more transparent than the first where the CBK failed to disclose potential investors who had submitted bids and the process for shortlisting them. The regulator also failed to explain why some investors were locked out of the bidding process.
Failed Receivership Process
The extended receivership period has exhausted Imperial bank’s assets through CBK’s and Kenya Deposit Insurance Corporation’s legal suits and a forensic audit contract. The results of this audit are yet to be released to the public.
Last year in July, the High Court extended the receivership period based on the central bank’s promise to complete the recovery process within the allocated time. However, the process of finding the appropriate investor is taking longer than expected. The receivership extension ends on July 31.
Imperial Bank collapsed after a fraud worth Sh38 billion was carried out by the Group Managing Director Abdulmalek Janmohammed in collaboration with top CBK officials.
