On September this year, KCB bank started processing Sh3.2 billion for Imperial Bank depositors marking the close of a tumultuous chapter that almost crashed the Kenyan banking system.
Five years ago this month, CBK put Kenya’s number 17 bank under receivership which shook the industry to the core.
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CBK’s decision to put Imperial Bank under receivership for operating in ‘Unsafe or unsound business conditions’ just months after shutting Dubai Bank (August 14, 2015) led to a confidence crisis where banks refused to lend to each other and customers fled small lenders.
It did not help that a malicious list was circulated online claiming that almost half of Kenyan banks were likely to be closed following news of Imperial Bank’s receivership.
The blood was everywhere from the stocks market where investors were selling their bank shares to mass withdrawals by customers.
The Central Bank of Kenya (CBK) was forced to come out to calm depositors and assure investors of stability in the banking sector in three press releases including one in conjunction with Capital Markets Authority (CMA) clarifying the problems at Imperial Bank had been brought to its attention by the bank’s board of Directors.
To this date, very little is appreciated of what it took to calm the storms from this collapse.
KCB played a major role together with DTB-the Agha Khan bank which sought to secure Ismailia customers who were drawn to Imperial Bank by their fellow Abdulmaleck Janmohamed.
The bulk of Imperial Bank customers were initially allowed to withdraw up to Sh1 million when the lender first opened under the management by KCB and DTB.
NIC Bank made two disbursements totaling Sh10.78 Billion to over 5,500 depositors on behalf of KDIC.
KCB was also the sole contender after apparently only three other bidders tried to buy the bank that went under receivership in October 2015.
KCB continued to work with CBK and KDIC and have seen to it that, 93 per cent of eligible depositors have been fully paid as this is the first payment as scheduled under the transaction, a part-asset transfer that commenced in 2019.