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The regulator has in the meantime appointed Kenya Deposit Insurance Corporation (KDIC) as a receiver for Dubai Bank Kenya for a period of 12 months/FILE

Kenya

Dubai Bank Kenya placed under receivership

The regulator has in the meantime appointed Kenya Deposit Insurance Corporation (KDIC) as a receiver for Dubai Bank Kenya for a period of 12 months/FILE

The regulator has in the meantime appointed Kenya Deposit Insurance Corporation (KDIC) as a receiver for Dubai Bank Kenya for a period of 12 months/FILE

NAIROBI, Kenya, Aug 14 – The Central Bank of Kenya (CBK) has placed Dubai Bank Kenya under receivership following what it termed as “serious liquidity challenges and capital deficiencies.”

The regulator has in the meantime appointed Kenya Deposit Insurance Corporation (KDIC) as a receiver for Dubai Bank Kenya for a period of 12 months.

“Dubai Bank Kenya has been experiencing serious liquidity and capital deficiencies which have raised the CBK concerns that it will most likely not be able to meet its financial obligations as and when they fall due,” CBK announced on Friday.

The action has been taken with the aim of protecting depositors, creditors and members of the public.

“Section 43(2) of the Kenya Deposit Insurance Act, 2012 requires CBK to appoint the KDIC as a receiver of a bank, if, among others, an unsafe or unsound condition to transact exists, a bank is likely to fail to meet its financial obligations, a bank has substantially insufficient capital or if there is a violation of any law or regulation,” the regulator explained.

Central Bank of Kenya clarified that it has been in contact with Dubai Bank Kenya, to attempt to rectify the situation but says that there has been no compliance by the bank even as its cash ratios continued to deteriorate.

The non-compliance with the cash reserve ratios has to date attracted a total penalty of Sh5.39million.

“Owing to the consistently deteriorating cash reserve ratio position of Dubai Bank and its failure to honour financial obligations, including Sh48.18 million due to Bank of Africa Kenya Limited, the CBK is of the considered opinion that the bank will most likely fail to meet financial obligations in the normal course of business.”

The receiver is now expected to release information about the resolution and the way forward of Dubai Bank Kenya in due course.

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