BY PAUL WAFULA
Depositors who have money in the collapsed Dubai Bank will only be paid a maximum of Sh100,000 as the reality of the bank’s situation starts to sink in.
Kenya Deposit Insurance Corporation’s (KDIC) acting Chief Executive Officer Aggrey Bett – the corporation was appointed receivers of the bank – said yesterday that all insured deposits would be paid up to a maximum of Sh100,000 per depositor. “Any balances above this amount shall equitably be paid as and when the liquidator accumulates enough funds from sale of assets of the collapsed bank and recoveries from outstanding loans and debts,” he said in a statement.
The corporation, formerly the Deposit Protection Fund Board, was appointed by Central Bank of Kenya (CBK) as a receiver for a maximum period of 12 months. Financial risk The bank was placed under receivership due to liquidity and capital deficiencies, which exposed depositors, creditors and the banking sector to financial risk.
Upon appointment as a receiver, KDIC assumed control of the assets, liabilities, business and affairs of Dubai Bank. Mr Bett said KDIC had already appointed a receiver manager to carry out the business and manage the assets and liabilities of Dubai Bank. “All powers of Dubai Bank and of its directors under the constituent documents exercisable by the bank or its directors under any law are now vested on KDIC and the receiver manager,” the corporation said.
CBK places Dubai Bank of Kenya under receivership KDIC says it has declared a moratorium on business that shall apply equally and without discrimination to all stakeholders of Dubai Bank during the receivership period. “Accordingly, normal operations of the bank are suspended except for collection of loan re-payments or any other payments into the bank.
Debtors are therefore encouraged to continue servicing their obligations,” the statement adds. The corporation will in the next two weeks keep all the four branches of the bank open for such transactions.
It will also undertake due diligence to ascertain the financial status of Dubai Bank in a bid to determine the most appropriate method of resolving the problem and take suitable measures to resolve the issues.
In the event that the receiver fails to resolve the problem by any other means, KDIC will be appointed by CBK as the liquidator to liquidate and wind up the affairs of theKDIC will on September 1, 2015 inform the depositors, creditors and all other stakeholders about the next process regarding access to their deposits, rights and obligations.
KDIC was formed to provide a deposit insurance scheme for depositors of member institutions licensed by the Central Bank and to receive, liquidate and wind up any assets in respect of which it was appointed receiver or liquidator, in accordance with the law. The corporation took over from the defunct Deposit Protection Fund Board with an expanded mandate to deal with the problem of banks under receivership, which was previously a role undertaken by Central Bank.
