THE PRESS RELEASE WE HAVE BEEN WAITING TWO WEEKS FOR - IMPERIAL BANK LIMITED

So we have been sitting tight for 2 weeks and one day. 

No access to our money, the banks still closed and the rumour mill running at a 100 miles an hour.  All the if’s, what’s and maybe’s that have been swirling around in the media has been quite entertaining if nothing else and I think Eric and I just wrapped ourselves into a small cocoon with anything concerning Imperial.  I have even been cracking jokes the last week, just to keep our chins up.  The thought of losing the last of my money didn’t seem that daunting as each day passed, which I think may have been denial kicking in to what could actually become a reality, but not wanting to deal with that until we knew the fate directly from the horse’s mouth. 

I was sent a WhatApp message from a friend last night, that had a link to the following information detailed below entailing the direction of the future of Imperial Bank. 

My bank. 

I was nervous to click the link. 

Was it going to be bad news? 

Good news? 

I opened the link to read the following:

1. On October 26, 2015, the Central Bank of Kenya (CBK) received a report on the state of financial affairs of Imperial Bank Ltd. (In Receivership) from the Kenya Deposit Insurance Corporation (KDIC). This follows KDIC’s appointment by CBK as receiver for Imperial Bank Limited (IBL) on October 13, 2015, according to the provisions of the Banking Act and of the Kenya Deposit Insurance Act. The appointment of KDIC as a receiver for IBL was done in the interest of IBL’s depositors, creditors, and members of the public.

2. CBK has reviewed the report, which confirms fraudulent activities of substantial magnitude, and the misrepresentation of IBL’s financial statements. These activities relate largely to irregular granting of loans by IBL’s management, contrary to the legal and regulatory requirements, and the internal policies of IBL. In particular, these irregular loans were a violation of the statutory limit of lending to a single borrower, and inadequate loan loss provisions, thereby overstating IBL’s capital adequacy position.

3. The fraudulent activities have resulted in a significant shortfall in IBL’s capital position. Nevertheless, CBK and KDIC consider IBL to be viable and have examined options that will lead to the prompt reopening of the bank. These options require the shareholders to inject new capital to meet the identified capital shortfall. The ultimate objective is to ensure that the reopened bank will remain viable.

4. CBK and KDIC met today with the bank’s shareholders and presented a proposal that will enable reopening of the bank and a resumption of operations. The proposal will require the injection of new capital, conversion of some of the large deposits to equity, recovery and collateralization of the fraudulent loans, as well as a change of Board of directors and senior management. The proposal envisages full access to small deposits, and a structured schedule of repayment to large depositors. CBK expressed its expectation that an agreement with shareholders should be reached enabling the bank to reopen in a month’s time.

5. Shareholders appreciated the proposal and expressed their strong commitment to reopen the bank quickly. Shareholders requested to consider the proposal over the next few days and to come back with an implementation plan for the way forward. In parallel, CBK and KDIC will on Wednesday, October 28, 2015, meet some representatives from a cross-section of IBL’s depositors to brief them on these developments. 2

6. In the meantime, steps are being taken to facilitate the recovery of the funds that were obtained irregularly from IBL. A forensic audit and other investigations are also ongoing on the culpability of these fraudulent activities. 7. CBK and KDIC will continue to work closely with IBL’s shareholders and all concerned parties to facilitate an expeditious resolution. CBK and KDIC will communicate further as the way forward is clarified.

CENTRAL BANK OF KENYA October 27, 2015

So I finally took a breath after reading the press release and I could only see good news.  A month is a long time, and a lot can change in 4 weeks, but if nothing else, this has come directly from the Central Bank of Kenya, the big player on the future of the bank and I am just going to have to believe that we will see our money again.  The light at the end of the tunnel is starting to shine a little brighter and we have a little hope again.  

The attempts to revive the beleaguered Imperial Bank of Kenya moved a notch higher this afternoon.At a meeting with the firm’s directors, industry regulator the Central Bank of Kenya issue a raft of demands including a permanent seat on the board before reopening the firm.  Also on the cards is a deal to scrap the current board of directors and also allowing depositors of up to 500,000KES to withdraw their savings.

The regulator is however not keen on having a strategic investor in the bank.

The directors had been keen of bringing on board fresh capital to bolster its ratios as it gears to open within the next month. 

Other guidelines agreed released by the regulator are as follows:

1. The Governor has categorically stated that the bank will be revived.

2. He has stated that shareholders have committed to inject more funds and he will demand for it to be deposited in hard cash into CBKs accounts.

3. Small depositors, below 500,000 will be allowed to withdraw their funds.

4. Large depositors will only access 5% of their funds immediately and the rest staggered over a 2 year period.

5. They need about Ksh5b in deposits to be converted to equity and this will be voluntary.

6. The governor states that there is no strategic buyer. Further, he would not wish to have a strategic buyer at the moment. He is more interested in having the bank first up and running.

7. He expects the bank to be opened in 1 months time.

8. He is keen to retain the management that was not involved in Fraud. He has even paid October salaries

9. The entire Board will be replaced. There will be no shareholder directors and CBK will have a permanent board seat.

Lets see what transpires in the coming weeks.