- Imperial Bank placed under statutory management in October
- NIC Bank will take portion of verified Imperial deposits
NIC Bank Ltd., a Kenyan lender, will acquire the deposits and some of the assets of collapsed Imperial Bank Ltd., central bank Governor Patrick Njoroge said.
The Nairobi-based bank will study the financial accounts of Imperial, which was placed under statutory management in October, and will absorb most of its branches and staff, Njoroge told reporters Tuesday in the capital, Nairobi. The acquisition of the assets was agreed with the state-owned Kenya Depositors Insurance Corp. after Imperial failed to provide assurances on how to reopen the bank, he said.
“Subject to a due diligence and contract review, and following negotiations, KDIC will dispose of, and NIC will assume, a portion of the remaining verified deposits along with certain other assets and liabilities,” the central bank said in an e-mailed statement. “It is expected that depositors will be granted access in a structured manner to about 40 percent of the remaining amount of verified deposits above 2.5 million shillings.”
Kenya’s banking industry is consolidating after the collapse of three lenders over the past year and as the government tightens capital requirements for the industry. The $61 billion economy is over-banked, with 42 banks serving more than 40 million people, compared with 22 banks in Nigeria, which has a population of 180 million and gross domestic product that is nine times bigger, according to Cytonn Investments Management Ltd., a Nairobi-based money manager.
Imperial was taken over by regulators after former Managing Director Abdulmalek Janmohamed died and the central bank was alerted by directors of the bank to inappropriate business practices.
NIC, Kenya’s ninth-biggest lender by market value, will obtain the Imperial assets in return for assuming the liabilities or deposits of the failed bank, Chief Executive Officer John Gachora said in a phone interview. The due diligence study is under way and is expected to be completed by the time its receivership expires on Oct. 12, he said.
“Once KDIC has decided what assets it wants to dispose of, we will then pay depositors on the agreed value of the assets we are assuming in a structured manner,” he said.
Shares in NIC gained as much as 6.1 percent on Tuesday before ending unchanged at 36.75 shillings. The stock has dropped 15 percent so far this year, underperforming the Nairobi Securities Exchange All Share Index, which has risen 1.1 percent in the period.