More than 5,000 large depositors with the collapsed Imperial Bank may have to wait longer for their deposits after shareholders moved to court to challenge their pay out.
The bank’s shareholders were Thursday allowed to proceed with a judicial review on the directive to have the depositors paid out, a move they say will liquidate the bank under receivership.
In the application filed Wednesday at the Nairobi’s Millimani High court, the shareholders have sought to prevent the Central Bank of Kenya (CBK), the Kenya Depositors Insurance Corporation (KDIC), Kenya Commercial Bank (KCB) and Diamond Trust Bank (DTB) from ‘undertaking any activities that lead towards liquidation of IBL.
They also sought to stop the entities from making any further payouts as well have information access to assist in bringing the bank back on its footing.
In December, CBK tasked the Kenya Commercial Bank and Diamond Trust Bank to pay all depositors with Sh1 million and below as the remaining 5,700 depositors were to receive their deposits by end of March 2016.
Led by their representative Anwar Hajee, the shareholders are seeking to stop any further transfer, assigning or disposing of the bank’s assets and be formally involved in any stakeholder dialogues which they claim they have been left out of.
Of grave concern
“Of grave concern of the applicants is the fact that the respondents have moved to the said exclusion of and transfer process as envisaged in the Kenya Deposit Insurance Act and regulation 15 of the Kenya Deposit Regulation 2015 without complying with the applicable legal requirements and as they fast-track the process, the clear direction that the respondents are taking is effectively liquidating the bank,”
The application will be another blow leaving depositors in the middle as tension between depositors and the CBK after the former failed to push through a demand to hold the deposits for three years until the bank recovers.
The bank went under receivership in October 13, last year leaving the fund managers and banks which had invested Sh2 billion in it with a fate of getting only get 5 per cent return on their five year investment. One Bread baker, Kenblest which owns 12.5 per cent of Imperial Securities has seen its fortunes tied to the troubled bank.
The same fate befell the Kenya Tea Development Agency’s (KTDA) Sh2.3 billion as well as the Center for Justice and Environmental Action (CJEA), Mombasa.
The Insurance Regulatory Authority (IRA) has disclosed that insurance firms had a total of Sh1.5 billion in the ill-fated lender.
KCB said it had an immaterial exposure of less than Sh200 million which was in the fallen financial institution.