The Kenyan subsidiary of KCB Group has been authorised to take over part of the liabilities and assets of the collapsed Imperial Bank, including Sh31,7 billion worth of deposits.
In a Kenya Gazette notice dated September 8, 2020, the Competition Authority of Kenya said it approved the transfer of the assets and liabilities.
“The Competition Authority has authorised the proposed transaction which entails the transfer of various listed assets, including outstanding deposit balance amounting to Sh31.7 billion, loans and security portfolios together with all rights, titles and interests thereto to KCB Bank Kenya Limited,” said CAK’s Director-General Wang’ombe Kariuki in the notice.
KCB had earlier said it would spend a token 10 US cents (Sh10.8) to acquire part of Imperial Bank’s business.
Payments of such small sums are necessary to give validity to commercial contracts where acquirers are not expected to pay a premium for the assets they are inheriting.
It highlights the high price bank owners can pay for running down their institutions to the point of being forced to sell for almost nothing under the supervision of the Central Bank of Kenya.
The regulator shut down Imperial Bank in 2015 after a large-scale fraud running into billions of shillings came to light, with the lender’s management and third parties accused of siphoning cash out of the company.
KCB’s deal mirrors that of Mauritius’ SBM Holdings which paid Sh100 to take over Kenya’s Fidelity Commercial Bank, with a commitment to inject additional capital into the small lender.
Unlike other businesses, banks are heavily regulated and failure to comply with conditions laid out in their operating licences can force their closure and sale to third parties. For Imperial Bank customers, KCB’s deal gives them access to their deposits.
