Home Finance List Of Kenyan Banks Placed Under Receivership

List Of Kenyan Banks Placed Under Receivership

by Von Umpiantu

The Kenyan banking industry has a total of 42 licensed banks all under supervision of the Central Bank of Kenya which is responsible for formulating monetary policies as well as promoting financial stability.

However, despite the presence of the ‘watch-dog’ banks can still find themselves in financial difficulties leading to liquidation.

Below, we look at some of the factors that led to receivership of once popular Kenyan banks.

1.DUBAI BANK KENYA
The bank was established in 1982 and as at Dec 2013, its total assets were valued at KES 2.92 billion.

The main factors that led to its collapse include: lack of capital and liquidity whereby the bank was operating below recommended cash reserve ratio of 5.25% set by CBK and set core capital of 1 billion and failure to honor financial obligations by not paying debts ( 48 million owed to BOA ).

Though it was penalized by CBK for non-compliance, the bank still continued to operate under such poor financial conditions.

This ultimately led to the bank being put under receivership on August 2015 by CBK and Kenya Deposit Insurance Corporation ( KDIC ) appointed the receiver.

2.IMPERIAL BANK KENYA
The bank was established in 1992 and as at Dec 2013, its total assets were valued at KES 43 billion

The main factors that led to its collapse include: unsound business practices whereby: Insider loans and re-classification of assets in loans were not reflected in bank’s financial statements, conspiracy by CBK officials and Imperial bank officials leading to 380 million dollars worth of bad loans and customer deposits through the use of a software reporting program that created unlawful and fraudulent accounts used to defraud depositors.

Gifts to CBK officials and loans often un-repaid, favors for employment for relatives and acquaintances and customer deposits being transferred to various accounts instead of generating returns for the bank.

Everything came to light after the managing director’s death whereby forensic reports un-earthed discrepancies in deposits, overdrafts, loans and investments contrary to financial reports made to the bank’s board.

This ultimately led to the bank being out under receivership on Oct 2015 by CBK and Kenya Deposit Insurance Corporation appointed the receiver and NIC bank given the responsibility of returning deposits to the bank’s customers.

3.CHASE BANK KENYA
-The bank was established in 1996 and as at Dec 2015, its total assets were valued at KES 142 billion.

The main factors that led to its collapse include: insider-loans whereby the bank extended most of its loans to insiders ( staff members and directors ) meaning the money was being issued without the normal market rates as well as non disclosure of under provision of non-performing loans, irregular withdrawals and money laundering through the use of internal accounts for private individual transactions.

This ultimately led to the bank’s financial results record a 742 million loss compared to the previous years 2.3 billion profit.

Initial clues of the bank’s collapse was raised via social media resulting to major depositors ( small and medium-sized businesses) withdrawing their money from the bank, fixed deposits and RTGS services being cancelled.

This led to forensic audits by CBK uncovering 15 billion missing from books which ultimately led to the bank being put under receivership on Apr 2016 by CBK and Kenya Commercial Bank ( KCB ) appointed the receiver.

However, the bank re-opened two weeks later whereby depositors could withdraw up to KES 1 million from their accounts.

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