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Collapsed Dubai Bank put under receivership

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The Central Bank of Kenya (CBK) has placed Dubai Bank Kenya under a receiver for a year in response to “serious cash-flow problems”. In a statement released this afternoon, CBK said it has appointed the Kenya Deposit Insurance Corporation (KDIC) as a receiver to protect the interest of depositors, creditors and the public.

CBK said Dubai Bank Kenya has been experiencing liquidity and capital issues which raised concerns that it will most likely not be able to meet its financial obligations as and when they fall due. 

“CBK has closely monitored Dubai Bank’s daily cash reserve ratio from July 14, 2015 when the bank began breaching its daily cash reserve ratio requirements,” the statement says. “(We have) also been in contact with Dubai Bank to attempt to redress the situation, but there has been no compliance by the bank.”

The non-compliance has to date attracted a penalty of Ksh5.4 million. “Owing to the deteriorating cash reserve ratio position and Dubai Bank’s failure to honour financial obligations, including Ksh48 million due to Bank of Africa Kenya, the CBK is of the opinion that the bank will most likely fail to meet its financial obligations in the normal course of business.”

The bank has been engulfed in drama in recent years, with some of its troubles including a managing director who fled the country to avoid CBK questions on his role in a dodgy deal; a chairman arrested and accused of obtaining his citizenship through fraud; claims it hosted a secret bank account used to loot Ksh1bn from Mumias Sugar Company and court battles with Kwanza Estates and Erdemann Properties, among others.

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