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CBK blocked cash injections that would have saved ailing Imperial Bank

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Central Bank of Kenya (CBK) turned down two offers from reputable and solid banks to acquire Imperial Bank shortly after it was placed under receivership, according to  shocking new revelations that are likely to intensify the spotlight on the regulator and add more credence to accusations that it is out to kill the financial institution.

CBK has been silent on whether there has been any interest expressed on acquisition of the fallen bank. But for the first time since Imperial was placed under receivership on October 13, 2015, the People Daily reports that State Bank of Mauritius (SBM) and I&M Bank had expressed interest in acquiring substantial equity in the troubled bank.

SBM expressed interest just 13 days after the bank was placed in receivership through a letter signed by Jairaj Sonoo, chief executive of SBM Holdings’ banking interests in the Indian Ocean islands. “Without any commitment on our part, we would like to express our interest to assist in the restructuring of Imperial Bank Ltd, subject to the approval of the board of SBM Holding Ltd as well as relevant regulators and our mutual agreements on the terms of such assistance,” said SBM Holdings in a letter issued on “most confidential” basis.

The letter was copied to Imperial Bank receiver manager Peter Gatere, CBK governor Patrick Njoroge and former Imperial Bank chairman Alnashir Popat. SBM, ranked among the top 1,000 banks in the world by The Banker magazine published by Financial Times is one of Africa’s strongest banks with an asset book of Sh225 billion and operations in Africa and Asia.

At the same time, I&M Holding, a surging banking group with operations across East Africa that was looking to expand its operations through an acquisition, would also placed its expression of interest in Imperial Bank to Kenya Deposit Insurance Corporation.

But it is not just the acquisition of Imperial Bank by strong banking groups with deep pockets that CBK rejected. People Daily has reliably learnt that large depositors offered to have part of their deposits turned into shareholding in the bank, but their offer was also flatly rejected.

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It is not clear why CBK turned down the interest to buy the troubled lender. However, a forensic audit report commissioned by Imperial Bank directors in October 2015 showed that CBK officials had been involved in the Sh34 billion fraud on the bank that led to its closure.

Both SBM and I&M copied their expression of interest in Imperial Bank to Gatere, the then receiver-manager. Approval of an acquisition of Imperial Bank would have opened the bank’s operations to a thorough due diligence which would have exposed the full extent of the involvement of CBK in the fraud.

Eventually, CBK granted approval for SBM to acquire Fidelity Bank while I&M was allowed to acquire Giro Bank.



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BT Correspondent
BT Correspondenthttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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