KCB Group #ticker:KCB has further cut the portion of the loan book it intends to take over from the collapsed Imperial Bank to Sh3.5 billion in a final offer that is set to close soon.
The lender’s initial review had identified Sh10 billion loans for takeover before cutting the target to Sh5 billion and now Sh3.5 billion.
The amount has dropped sharply after the lender failed to validate a huge chunk of the assets, leaving Kenya Deposit Insurance Corporation (KDIC) with the laborious process of verification.
Imperial Bank was placed under receivership in October 2015, after the board of the privately-owned lender alerted authorities to suspected malpractices.
KCB chief finance officer Lawrence Kimathi last week said the lender has settled on acquiring Imperial Bank loans worth Sh3.5 billion.
“Remember we were not doing an equity acquisition; we were doing an asset transfer so we did our due diligence, identified the assets we want to take over and the documentation is already signed and we are in the process of just moving that into KCB,” Mr Kimathi said.
“It was about Sh3.5 billion, the rest remains under the Imperial Bank in receivership,” he said. Imperial Bank receivership was extended to July this year to allow the KDIC to complete the sale of some of its assets.
KCB has maintained it will buy loans that have enough collateral, a pointer that a significant chunk of the loans have shaky security.
The outcome of KCB’s due diligence deals a blow to depositors of the lender under receivership and shines a spotlight on the quality of audit of the bank for the years it was allowed to operate under the supervision of the Central Bank of Kenya (CBK).
The CBK had in a 2018 December joint statement with KDIC announced that KCB would complete the loan verification within the first quarter of 2019 and unlock further recoveries for depositors.
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