Central Bank of Kenya (CBK) has placed one of the major banks in Kenya, Imperial Bank, under receivership for one year with a possibility of extension.
The Kenya Deposit Insurance Corporation has been appointed to assume the management, control and conduct of the affairs and business of the financial institution.
The body will also exercise all the powers of the institution to the exclusion of its board of directors and advise CBK of an appropriate resolution strategy as soon as is practicable and not later than twelve months from date of appointment.
This is the second bank to be put under receivership in 2015.In August, Central Bank of Kenya put Dubai Bank under receivership due to violation of banking regulations by maintaining substantially inadequate capital and which failed to meet its financial obligations.
During the 2014 budget, the CBK published a list of banks to be closed for failing to meet the minimum threshold to operate in the Kenyan soil; Dubai Bank was among the long list which was made public by the body.
According to Central Bank of Kenya, any Bank operating in Kenya must deposit at least Ksh 5 billion at CBK, which is way above the capital of majority of banks in Kenya.
It is believed that more banks are set to be closed following reports that their operating capital is below Ksh 5 billion.The banks include Giro Bank,Habib Bank,Consolidated Bank of Kenya and Jamii Bora Bank.
This is bad news to Kenyan banks,which post huge profits annually.