High Court paves way for Imperial Bank depositors’ payout

Imperial Bank
Imperial Bank

Imperial Bank owners have been dealt a major blow after the High Court paved way for the payment of depositors.

The clarification was made after the Imperial Bank owners and the Central Bank of Kenya and the Kenya Deposit Insurance Corporation appeared to read from different scripts on a ruling made on November 4, 2016.

According to Justice George Odunga the ruling made last year did not stop processing of deposit payments by NIC Bank DTB and the KCB Group.

“In my judgment of 4th November, 2016, this Court was clear in its mind that it cannot stop the Respondents from carrying out their statutory mandate,” Justice Odunga said.

A group calling itself the Imperial Bank Depositors’ Lobby had moved to court seeking the clarification.

In December, the KDIC announced that Imperial Bank depositors will receive up to 10 percent of their deposits still held in the bank.

“The disbursements to verified depositors will amount to a maximum of 10 percent of the current deposits, subject to a minimum of Sh200,000, or actual deposit amount for balances below Sh200,000,” KDIC said in a statement earlier.

The banking regulator and Imperial Bank shareholders have constantly batted heads over the handling of the receivership with each party filing multiple suits in court.

The protracted battle saw the Central Bank extend the bank’s receivership period to March this year as it puts its case and way forward for the bank in place.

Imperial Bank shareholders have consistently argued that by paying depositors using the banks internal funds amounted to winding up of the bank.

Justice Odunga however stressed that both the CBK and KDIC were obligated to appraise shareholders on any moves that would lead to liquidation and allow for proposals to keep the bank open to be tabled.

“Whereas the respondent could legally take actions whose effect would result in adversely affecting the interests of the applicant such actions had to be strictly within the confines of the law and the constitution and that the Respondents were under an obligation to consider any reasonable and viable proposals or recovery plans put forward by the applicants towards the revival of the normal business of the bank,” he said.

Since 2015, depositors have accessed Sh2.5 million of their deposits.

The first Sh1 million was processed by KCB and DTB in December 2015, while a further Sh1.5 million was made available through NIC Bank.

NIC Bank, which was appointed as the assets and liabilities manager for Imperial Bank, will process the payment of up to 10 percent of deposits still held in the bank.

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