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KDIC Chief Executive Officer Mohamud Ahmed Mohamud with KCB ceo Joshua Oigara

Finance

KCB to take 7.5 per cent of outstanding Imperial Bank deposit balances

KDIC Chief Executive Officer Mohamud Ahmed Mohamud (left) with KCB CEO Joshua Oigara (right) during a joint press briefing on the ongoing receivership of Imperial Bank Limited on Thursday/KDIC

By Juliet Omelo: NAIROBI, Kenya, Aug 29  – Kenya Central Bank (KCB) is set to take over 7.5 per cent of the outstanding deposit balances at the Imperial Bank (IR) translating to a total recovery rate of 38 per cent.

Speaking during a joint press briefing on an ongoing receivership on Thursday, Kenya Deposit Insurance Corporation (KDIC) Chief Executive Officer Mohamud Ahmed Mohamud said that KDIC and Central Bank of Kenya (CBK) will undertake to continue pursuing the outstanding loan balance for the benefit of depositors and creditors.

“In addition, the two institutions will collaborate with other financial institutions to authenticate and consider uptake of the remaining loan assets to enhance further recovery,” added Mohamud Ahmed.

CBK and KDIC in their joint announcement April 5, 2019, accepted the offer from KCB Bank Kenya to enhance recovery of depositors in the defunct bank subject to detailed due diligence on selected loan assets by KCB.

In December last year, CBK and KDIC had announced the release of funds increasing total recovery to approximately 35 per cent of the original eligible deposits held at the receivership date of Imperial Bank Limited.

This saw approximately 92 per cent of eligible depositors IR granted full access to their bank balances with funds being released in four tranches since the receivership.

KDIC is on the other hand at an advanced stage to roll out a risk-based premium by July next year.

Mohamud said that banks and micro-finance will be assessed in accordance with their risk profile as a measure to instill market discipline and avoid problems in banking.

This will serve as an initiative aimed at mitigating problems within the industry.

“As much as banks and micro-finance institutions are private, they hold public assets in the form of deposits that ought to be prudently managed and invested,” added the KDIC CEO Mohamud.

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The risk-based premium will be charged based on the number of risks one takes, meaning the higher the risks the more premium paid.

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