This archive report was first published on 16 November 2019.
On November 16, 2019, the Kenya Deposit Insurance Corporation (KDIC) announced plans to invite other local banks to bid for some of the remaining assets of the collapsed Imperial Bank. This move comes after KCB finalized its partial takeover of some of Imperial Bank's loans and deposits, identifying Sh5 billion worth of loans that it plans to buy.
Despite this, KDIC still has a significant portion of over Sh30 billion loans that Imperial Bank had. KDIC Chief Executive Mohamud Mohamud stated that the agency is on the final lap with KCB, which is taking part of the assets, and that there are just a few statutory requirements that need to be fulfilled.
KDIC has received a bid from an American firm to take over the fallen lender but dismissed the suitor as it did not meet the basic requirements to acquire the assets. The agency also received proposals from Amassment Corporation, which included the formation of a special purpose vehicle that it would jointly own with KDIC, but this did not sit well with the depositor protection agency.
Mr. Mohamud emphasized that loans can only be acquired by a bank licensed by the Central Bank, and that the proposed SPV would require KDIC to invest 20 per cent, which it cannot do due to lack of funds and legal restrictions.
KDIC has paid about 35 per cent of depositors' money that Imperial Bank had at the time it went under. The agency provides a safety net for depositors should a bank experience distress and collapse. Currently, KDIC can pay depositors a maximum of Sh100,000 but plans to increase this to Sh500,000 by July next year, which would cover nearly all depositors in the country.
Going forward, KDIC plans to charge banks on a risk-based premium, which will be dependent on the current rating by the Central Bank.
