Shareholders, CBK in loggerheads over reopening of Imperial Bank

By O’Brien Kimani

Seven shareholders of Imperial bank currently under receivership have accused the Central Bank of derailing the re-opening of the troubled bank.

The seven companies that include Thika based bread-maker Kenblest limited and road construction firm Reynolds & Company says they have presented to CBK a turn-around strategy but the regulator has failed to act on the plan.

Last week the Central Bank accused major shareholders with the bank of scuttling the recapitalization of Imperial bank.

The re-opening of Imperial bank seems to be taking longer than expected with shareholders engaged in a vicious war of words with the Central Bank of Kenya.

The bank was placed under receivership last month due to what CBK termed as gross misconduct following the loss of billions of shillings through an elaborate scheme by directors of the bank led by the former chief executive the late Jan Mohammed.

Investigations by forensic auditors showed fraudulent disbursement of loans coupled with inadequate provisions for bad loans eroded Imperial Bank’s capital adequacy position, making it mandatory to pump in new funds.

A proposal by the bank on fast-tracking the re-opening of the bank has split the top shareholders with CBK.

The proposal requires the injection of new capital, conversion of some of the large deposits to equity, recovery of the fraudulent loans, as well as a change of board of directors and senior management.
A statement today by the seven top shareholders with the bank has differed sharply with the CBK proposal.

The shareholders are calling for the appointment of a steering committee drawn from, the banking industry, legal and professional.

The steering committee should also have representatives from depositors.

The plan also calls for the conversion of some loans into equity, this is however likely to face serious legal headwinds since some of the stakeholders have rubbished this proposal.


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