Imperial Banks asset-value falls by over 50% in one year

The value of net assets held at Imperial Bank Limited in Receivership (IBLIR) has sunk by half in the past year to a sum lesser than Ksh.5.2 billion ($50 million).

The deterioration casts a shadow on the ongoing efforts to recoup back gains to shareholders and depositors who have endured a lengthy wait to the resolution of the lender since its collapse in October 2015.

The revelation was made on Thursday by KCB Group, which had in April submitted its binding offer to curve out a share of five branches from part of Imperial Bank total assets.

“Initially we estimated assets worth $100 million (Ksh.10 billion) but that has since come down to less than half,” KCB Group Chief Executive Officer Joshua Oigara told investors.

The devaluation of the grounded bank will however not affect the extraction of branches as KCB sticks to the freeing of Imperial ‘good portion’.

KCB has since cherry-picked a pair of the bank’s branches in Nairobi, one in Mombasa and Diani and a further branch in Eldoret, with the lender now holding out for the winding up of the excavation process by the close of the year.

“This doesn’t put us off as the transaction is not an acquisition. We expect to re-brand the branches into KCB outlet and will on-board existing staff who will continue being the relationship managers for customers,” KCB Chief Financial Officer Lawrence Kimathi told Citizen Digital.

The revised stake-out period by KCB will now sit along its impending acquisition of the National Bank of Kenya (NBK), a deal which in its parts await the approval of the banking sector regulators.

Imperial Bank’s lowered valuation now raises the stakes for the lender’s pair of custodians in the Central Bank of Kenya (CBK) and the Kenya Deposit Insurance Corporation (KDIC) who have since the bank’s grounding pursued an amicable resolution to the impasse on recoveries.

Lengthy delays have defined the custodians’ dealings as ongoing litigation grinds down the recuperation drive.

Current court cases have seen the lock-down of an estimated Ksh.36 billion in customer deposits at IBLIR, a figure estimated to be in excess of 50 percent of the total deposits.

According to Imperial Bank’s last public disclosure of its books of accounts at December 2014, the bank’s net assets stood at Ksh.7.8 billion with gross assets and liabilities at Ksh,64.6 billion and 56.8 billion respectively.

Of the Ksh.56.8 billion in liabilities, the bank held a total Ksh.56.1 billion in customer and banking institutions deposits.

An interrogation of the depreciation of net assets by the grounded bank is plausibly attributable in part to the impairment of hard assets, the elevation of bad loans from the banks performing loans, or a combination of both.

CBK put Imperial Bank under receivership sighting unsound and unsafe business conditions and following the lifting of the lid on suspicious activities by the bank’s respective shareholders and directors.

Subsequent efforts to attach the assets of the lender to a suitor have only gathered the attention of KCB following the withdrawal of the other single and unnamed groom in early 2018.

KCB’s binding offer has however freed up a portion in excess of 50 percent of held customer deposits at Imperial Bank in nine months since the recovery of 12.5 percent of client funds in December 2018.

The recoveries followed the separation of the lender’s ‘good’ and ‘bad bank’ following the conduct of due diligence on Imperial’s balance sheet in 2017 by NIC.

Imperial Bank had an estimated 32 branches across Kenya and Uganda at the time of the directive on receivership.