By M&M Team
Imperial Bank depositors will now have to wait longer to access their savings locked up in the troubled bank after it emerged today that Central Bank of Kenya is preparing to begin afresh the process of seeking an investor to take over the bank.
Coming 14 days to expiry of the receivership extension granted last year to facilitate the bank’s recovery the move means that CBK will have to move to the High Court to seek for another extension of the receivership which is currently in its third year.
Sources familiar with the goings on in the process of seeking an investor to take over the bank divulged that the decision to restart the search was reached on July 16, 2018.
Details of what informed CBK’s decision to start the process afresh are still scanty by the time we were going to press. CBK had not responded to our queries on the new developments by the time were publishing this story.
The move to begin the search anew from the scratch means that CBK has rejected the proposals for the recovery of the bank that had been submitted by both KCB Group and Diamond Trust Bank.
It has not been lost to keen observers that while CBK is entering its third without a solution to Imperial receivership, Bank of Uganda resolved Imperial Bank’s Uganda subsidiary in less than a year.
But even as CBK prepares for a new round of a call for expression of interest on the troubled bank it will be interesting to see how it handles the new search for investors.
For example, observers will be keen to see whether the process that will be used to shortlist investors will be made public before the process has begun. It will also be interesting to see whether the former shareholders of the bank will be invited to submit their bids in the second round of the search.
It is instructive to note that the process that has just failed to end the receivership was marked with opaqueness that kept everyone in the dark.
Attempts by Imperial Bank depositors to get updates on the recovery process were met with silence during the 12 months receivership extension. CBK would not divulge how many investors submitted bids and the process that had been used to shortlist them.
The banking regulator has also not explained why some of the interested investors were locked out of the bidding process yet CBK had indicated that the expression of interest would be open to all.
While the secrecy in such operations to resolve receivership is understandable in normal circumstances, Imperial Bank receivership was normal on many fronts.
First, the receivership was a result of a fraud that was orchestrated with the active support of senior banking supervision officials at CBK.
Secondly, the shareholders had on the onset of the receivership in 2015 indicated their willingness to nurse the bank back to health after non-executive directors discovered the fraud and reported to CBK.
Then there is the fact that CBK had rejected another offer from State Bank of Mauritius (SBM) to to help revive the bank.
Lastly, the bank’s assets have been thoroughly depleted during the three year receivership period by legal suits instituted by CBK and KDIC on behalf of the bank, and a forensic audit contract whose results are yet to be made public.
In such circumstances, it was expected that banking regulator would play his cards in the bidding process above the table to avoid suspicion that it was sabotaging the process to cover up for the sins of its current and former senior officials.
It is important to remember that the two banks had insider information when they submitted their bids. CBK had given the two banks had topped the shortlist access to Imperial Bank records in 2016, one year before the banking regulator made the call for expression of interests from investors.
Matters have not have not been helped by the fact that DTB,the other bank alongside KCB, that CBK had shortlisted as the potential investors had skeletons to hide relating to the Imperial Bank fraud.
DTB was one of the banks through which depositors’ funds were siphoned off from Imperial Bank.
In the meantime, the clock is ticking towards July 31 when the receivership extension expires. The High Court granted CBK orders to extend the bank’s receivership in July last year, following the banking regulator’s commitment that it would complete the recovery process with a new investor taking over the troubled bank within the extended period.
But the pace of identifying the suitable investor began to slow down immediately after CBK made the call for expression of interest from investors.
Imperial Bank collapsed under the weight of a Sh38billion fraud orchestrated by former Group Managing Director Abdulmalek Janmohammed with active support from senior CBK officials.