Imperial Bank Ltd., which has been in administration for over two years now, is set to be acquired by Diamond Trust Bank Kenya Ltd. in an effort to revive the troubled lender. All its assets and liabilities will be acquired by DTB in this move.
Without naming any banks, the central bank said last year that three companies had expressed interest in taking over Imperial. KCB Group Ltd., Kenya’s biggest lender by assets, was allegedly one of the bidders, the company declined to comment.
The offer made by DTB was said to be the best and negotiations over the acquisition of the so-called good assets are still ongoing.
After unreported loans were discovered in October 2015, the board of Imperial Bank Ltd. sought protection, which led to administrators taking over management.
The alleged malpractice that led to the seizure of Imperial was that late Managing Director, Abdulmalek Janmohamed, who died in September 2015, allowed certain customers overdraw their accounts and concealed overdrawn amounts using secret accounts and financial reporting software. This resulted in published financial reports not reflecting the true financial health of the bank, according to George Oraro, a lawyer for the bank.
In that same, period Chase Bank Kenya Ltd. and Dubai Bank Kenya Ltd., were also taken over.
For the sale of Imperial, administrators are expected to isolate the illiquid and high-risk asset and dispose of the performing assets. High-risk assets are also referred to as bad bank while performing assets are referred to as good bank.
The bank’s depositors are said to be expecting to be paid 75% of their deposits, according to Azeem Haji, a committee member of the Imperial Banks Depositors Lobby Group.
“Our analysis shows that the good bank can cover 76% of deposits,” he said by phone. “They have also been collecting bad loans.”
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