Two things Imperial Bank must do to be reopened

Imperial Bank could be re-opened next month but only if the owners meet two tough conditions set by the Central Bank of Kenya (CBK): injencting fresh capital and overhauling its management.

Re-opening would be a reprieve for thousands of customers who will be able to access their deposits, estimated at Kshh58 billion. A meeting between the CBK and the shareholders of the bank held on Tuesday last week resolved to change top management and capital injection, following revelations that the lender’s financial position was grossly overstated.

“CBK expressed its expectation that an agreement with shareholders should be reached enabling the bank to reopen in a month’s time,” said a statement from the regulator. In its opinion, the bank was still viable and could survive the fraud perpetuated by its management, led by former managing director, the late Abdulmalek Janmohamed.

Also see: How CEO led other managers in robbing Imperial Bank

Small depositors would be granted priority to withdraw their funds if the shareholders meet the requirements spelt out. Large depositors-with more than Ksh100,000 in the bank, will be repaid in ‘a structured schedule,’ according to CBK’s proposal. More than 55,000 depositors have been locked out from accessing their funds after the bank was closed earlier in the month after revelations of gross abuse of sector guidelines.

Shareholders of the bank have moved to court seeking to recover over Ksh34 billion irregularly lent to firms associated with the late Janmohamed.  Details held in the suit show Janmohamed colluded with 20 companies to siphon billions from the lender, where he was a founder and among the top shareholders.

Among the property that the shareholders want frozen include 35 companies where the late Janmohamed had a direct interest in via Janco Investments Limited.

Next read: Central Bank Governor tightens the noose on banks