Court bars transfer of Imperial Bank assets to NIC


Court bars transfer of Imperial Bank assets to NIC

The High Court has blocked a move by the Central Bank of Kenya (CBK) to transfer assets and liabilities of Imperial Bank to NIC Bank.

This follows an application by Imperial Bank owners on Wednesday, seeking to block the move arguing it amounted to liquidation of the bank without proper findings from the banking regulator.

The order also blocks the possible payment to depositors, after a deal reached by NIC and the Kenya Deposit Insurance Corporation (KDIC) to pay depositors up to Sh1.5 million.

“It is hereby ordered that the respondents (CBK and KDIC) not dispose of the assets of the Imperial Bank pending the said hearing,” the High Court said.

The case is set to be heard on Friday June 23.

Through the order, the central bank will be unable to go ahead with its plan to have NIC Bank make payments to depositors or assume the banks staff and branches.

NIC Bank Group Chief Executive John Gachora said that the bank had planned to absorb a majority of Imperial Bank’s staff as well as manage part of its branches.

“The majority of them (staff) will be absorbed by NIC Bank. Through this process those branches will become NIC branches and will be open and through that depositors will be able to access some of their funds,” Mr Gacharo said in an interview on Citizen Business Centre.

Imperial Bank shareholders have since October, when the bank was placed under receivership, faulted how the CBK has handled the process. After seemingly blowing the whistle on the Sh34 billion fraud scheme at the bank, the shareholders have felt betrayed in what looks like an orchestrated move to have the bank closed.

“….it confirms that the CBK’s ultimate objective is to place the bank into expedited liquidation in the hope that this will help to bury the evidence of CBK’s own role and that of other third parties in the fraudulent and illegal activities that lead to the collapse of the Bank in October 2015,” shareholders said in an affidavit.

The central bank has been carrying out a forensic audit of Imperial Bank and is yet to give a verdict on the next course of action. Shareholders further argue that transferring of assets and liabilities go against ongoing court cases, as shareholders fight action that may lead to the banks liquidation.

“This act by the respondents (KDIC and CBK) is an enhancement of the exclusion and transfer process commenced by them, which process ultimately culminates in liquidation of the bank,” they say in the affidavit.

Imperial Bank owners have been at logger heads with CBK over a revival plan first mooted last year. Shareholders had proposed recapitalizing the bank and bringing on board a strategic investor as a quick fix to have the bank re opened but that plan was shot down by the regulator.

For Citizen TV updates
Join @citizentvke Telegram channel



Video Of The Day: | TALES OF LAMU | Island grappling with an acute shortage of fresh water

Avatar
Story By Michael Karanja
More by this author