CBK seeks further probe before giving direction on fate of Imperial Bank

Corporate News

Imperial Bank branch. CBK has postponed the announcement of how it will resolve the issue of the collapsed lender. PHOTO | FILE 

By SANDRA CHAO-BLASTO

In Summary

• The Central Bank of Kenya (CBK) had earlier said it would make a decision on the future of the bank by Thursday.

The Central Bank of Kenya (CBK) has postponed the announcement of how it will resolve the issue of collapsed Imperial Bank, citing need for further investigations into the bank that was placed under receivership in October last year.

The regulator had earlier said it would make a decision on the future of the bank by Thursday.

“The announcement of a way forward needs to be postponed until significant progress on the forensic audit has been made, expected in the next three months,” CBK said in a statement Thursday, adding that it will hold a meeting on Friday with Imperial’s depositors to discuss matters relating to the bank.

CBK’s announcement came on the same day the High Court dismissed an application filed by shareholders of Imperial seeking to stop the regulator and Kenya Deposit Insurance Corporation from taking decisions that would result in its liquidation.

In his ruling Justice George Odunga said the shareholders failed to show an imminent danger that would occur if an order to stop the liquidation process was not granted.

“I have said enough to show that the application by way of Motion on Notice dated February 18, 2016 lacks merit,” he ruled.

“Accordingly the order that commends itself to me and which I hereby grant is that the said motion be and is hereby dismissed with costs to the Respondents and interested parties.”

READ: Imperial Bank shareholders sue CBK to stop liquidation

Justice Odunga noted that once the receiver was appointed, the directors no longer have a free hand in deciding the manner in which the applicant company’s assets can be disposed of and neither were the shareholders entitled to be privy of ongoing investigations.

“The furnishing of information is not warranted at this stage of the proceedings as to do so may interfere with the ongoing investigations and taking into account the public interests involved, such an order may not be proportionate to what the investigations are intended to achieve,” he said.

Reynolds & Company Limited, East Africa Motor Industries Momentum Holdings Limited, Abdulmal Investments Limited and Kenblest Limited had moved to court as shareholders of Imperial Bank seeking to stop the transfer of the bank’s assets and liabilities to Diamond Trust Bank Limited (DTB) and Kenya Commercial Bank Limited (KCB) who were also listed as interested parties in the application.

CBK appointed KDIC as a receiver of the bank in October last year for a period of 12 months.