Kenya Power’s Sh322m locked in Imperial Bank
What you need to know:
- Kenya Power is among the large depositors who risk losing millions of shillings following Imperial Bank’s failure in October last year.
Kenya Power has Sh322.4 million locked up at the collapsed Imperial Bank, the electricity distributor has disclosed.
The Nairobi Securities Exchange-listed firm reported the amount in its latest annual report, ranking among the large depositors who risk losing tens of millions of shillings following the bank’s failure in October last year.
“Imperial Bank deposits provision relates to a provision recognised against the full amount of cash that Kenya Power and Lighting Company Limited had invested in Imperial Bank of Kenya,” the company says in the report.
The lender was placed under statutory management after a multi-billion shilling fraud was revealed, with the lender’s top executives and directors implicated.
The bank’s collapse sent shockwaves among depositors, with those holding large sums staring at hefty losses.
The collapse of Imperial has seen Kenya Power shift most of its short term deposits to KCB Group and Co-op Bank, cutting its exposure to the relatively smaller lenders.
“Credit risk arising from short term deposits and bank balances are low because the counter parties are financial institutions with high credit ratings,” the company says in the report.
Kenya Power’s short term deposits stood at Sh3.8 billion as of June compared to Sh4.2 billion a year earlier while cash balances dropped to Sh1.6 billion from Sh23.9 billion in the same period.
How quick and successful Imperial Bank will be resolved will determine the ultimate fate of the large depositors including Kenya Power.
The Central Bank of Kenya (CBK) intends to liquidate the collapsed lender, a move that would see the outstanding creditors and depositors receive compensation depending on the proceeds of the sale.
The regulator said it opted to sell the lender after its shareholders declined to provide new capital needed to recapitalise it.
NIC Bank has expressed its intention to buy part of Imperial Bank’s assets including branches. Depositors have so far received a maximum of Sh2.5 million, with those holding larger sums awaiting decisions from the courts that have also stopped CBK’s liquidation plan.
An Imperial Bank depositors’ lobby group has meanwhile pushed to hold talks with CBK over possible payment of their savings.
