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UPDATE 1-Kenya central bank to extend receivership of Imperial Bank, licenses new bank
June 23, 2017 / 10:34 AM / 3 months ago

UPDATE 1-Kenya central bank to extend receivership of Imperial Bank, licenses new bank

(Adds licensing of new commercial bank)

By George Obulutsa

NAIROBI, June 23 (Reuters) - Kenya’s central bank said on Friday it planned to extend the receivership of Imperial Bank by a year to help finalise a deal with a strategic investor to take a stake in the bank.

The regulator also said it had granted a licence to a new locally owned bank, Mayfair Bank Limited, the second such licence since 2015, when it imposed a moratorium on approving new lenders.

The central bank gave no reason for the suspension of licensing, but it came after it had placed Imperial Bank under receivership in October 2015, following the board of the privately owned mid-sized lender alerting it to suspected malpractices.

The Imperial Bank receivership rattled confidence in a financial sector where more than 40 foreign and local banks operate - especially as it came just two months after the liquidation of a smaller bank.

“After initial preparations, the formal process will commence with an invitation for expressions of interest from potential strategic investors, and the bank’s shareholders if they so wish, in taking an interest in the bank,” the central bank said in a statement.

“Mindful of the concerns by depositors and the need for the process to be fully credible to potential strategic investors in order to maximise the value for depositors, the entire process is anticipated to be about 48 weeks.”

The central bank had initially hoped to get Imperial Bank out of receivership by March 2016, but this was delayed after the regulator said it needed more time for investigations to determine Imperial’s fate.

In also announcing the granting of the new licence, the bank said: “Mayfair Bank Limited will principally target the corporate market segment.”

It said Mayfair would use an initial network of two branches in Nairobi and one in Mombasa.

In April, the central bank issued a licence to DIB Bank Kenya Ltd, which is owned by United Arab Emirates-based Dubai Islamic Bank.

In March, the central bank said both banks had received “approval in principle” before the 2015 suspension of licensing. (Reporting by George Obulutsa; Editing by Alison Williams)

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