The Kenya Commercial Bank (KCB) has paid out Ksh2.98 billion to Imperial Bank customers since taking over the defunct lender’s assets, representing 93% of the total Ksh3.2 billion which is expected to be paid fully over a period of four years
In a statement, KCB said it has commenced payment of funds to remaining eligible depositors in disbursements.
The exercise which kicked off on September 3, 2020, will see the depositors approved by the receiver-manager Kenya Deposit Insurance Corporation (KDIC) get partial access to their bank balances.
On May 22, 2020, the Central Bank of Kenya (CBK) announced the acquisition of assets valued at Ksh.3.2 billion and assumption of liabilities of the same value of Imperial Bank by KCB Bank effective June 2, 2020.
This is the first payment as scheduled under the transaction—a part asset transfer—that commenced in 2019.
The payments to eligible depositors were to be made as follows; 12.5 percent on completion of signing of the agreement; 12.5 percent on the first anniversary of the signing; and 25 percent each on the second, third and fourth anniversaries respectively.
“This is significant progress in our efforts to ensure that Imperial Bank depositors receive their long-awaited dues. We remain committed to support the recovery of funds and we are optimistic that these efforts will be a success in the fullness of time,” said KCB Group CEO and MD Joshua Oigara.
KCB acquired Imperial Bank’s assets at peppercorn (Ksh10) after the lender was shut down in 2015 due to insider fraud that threatened its stability.
For that price, KCB took over the collapsed bank’s deposits and loans without paying a premium with the knowledge that once it completed paying the dues, the new customers would bring in new business and add to the group’s already vast pool of customers.
In legal parlance, a peppercorn is a metaphor for a very small payment, a nominal consideration, used to satisfy the requirements for the creation of a legal contract.
A peppercorn is also used in more balanced contracts, where one side wishes to conceal the nature of their payment.