Imperial Bank’s 53,000 account holders’ tales of pain and despair

Imperial Bank depositors were Thursday denied access to their money for the third day in a row, leaving most with stalled business transactions and unable to meet their financial obligations. 

A large fraction of the 52,398 depositors, reduced to paupers by a stroke of the pen on Tuesday, were forced to take up new loans at exorbitant rates to meet immediate financial needs.

The Consumer Federation of Kenya (Cofek) said it had received numerous complaints over the Central Bank of Kenya’s (CBK) decision to deny the collapsed bank’s customers access to their money and had registered 15 cases for possible action.

“People are asking why their money should be locked in when the bank’s troubles have nothing to do with depositors,” said Cofek chief executive Stephen Mutoro. “The rational thing to do in such a case was to freeze the directors’ accounts and take steps to ensure they do not leave the country.”

Sh2 billion hotel

The list of Imperial Bank’s directors includes chairman Alnashir Popat, who has directorship in 30 other companies such as Pathcare Limited, a medical firm.

His company Imaran Real Estate in partnership with Tune Hotels — associated with Malaysian tycoon Tony Fernandes who owns the English football team Queens Park Rangers — is building a Sh2 billion hotel in Nairobi’s Westlands.

Kenblest, a bread making company associated with bank’s directors, has a 12.5 per cent holding in Imperial Bank Group.

Meanwhile it emerged Thursday that the CBK was relying on a recent change of law that gave powers to the receiver manager, the Kenya Deposit Insurance Corporation (KDIC), powers to take control of a bank in operation if there were queries over its safety.

The move was meant to prevent asset stripping by directors whose institutions were facing eminent collapse.

The Business Daily spoke to a number of depositors in the ill-fated bank on the pain they have suffered from the closure and how they are coping with it.

George Omondi Alango, 25

I opened a salary account at Imperial Bank’s Parklands branch four months ago. As of Tuesday, when the bank was placed under receivership, I had between Sh50,000 and Sh100,000 in the account. To put it simply, this action has crippled me economically.

It is still early in the month and, although I had settled most of my bills including rent, I still need money for transport, food and personal projects.
At the time of the bank’s closure, I had some money in my mobile phone account but it is running out fast.

I am exploring ways of getting some money but I will most likely be forced to borrow in order to survive.

The closure caught me totally off-guard; one day you have money, the next you are broke, having not spent a shilling. It is extremely frustrating.

What has angered me most about this episode is the fact that Imperial Bank has until now not bothered to contact me to explain the situation or tell me what has happened to my savings.

I learned that Imperial Bank has been put under receivership through social media, minutes after I had unsuccessfully tried to withdraw money through its mobile banking application. I made several phone calls to the bank but they all went unanswered.

Patrick Wambua Muindi, 30

I work for an engineering company in Mombasa and I have operated a savings and salary account with Imperial Bank for the past four years. By the time the bank was placed under receivership, I had about Sh100,000 in both accounts.

I visited my Changamwe branch immediately the (receivership) announcement was made. I was, however, turned away by security guards who bluntly told us we would be contacted at an opportune time, which was extremely vague.

I have not been able to transact on either of the accounts and any attempt to get guidance from Imperial Bank, either through their telephone line or Twitter, has been futile.

My wife is unemployed; she is the one mainly taking care of our newborn child. Young children demand a lot of money every day, money which is now locked away in my accounts.

Since I do not have any access to my account, I have been forced to borrow money to cater for my family’s basic needs, including money to pay my rent. I am in the dark and feeling quite helpless. I had not anticipated such an occurrence, otherwise I would have operated another account in a different bank.

Jinit Shah, Kenblest Limited

Kenblest Limited, which owns 12.5 per cent of Imperial Securities, the holding company of Imperial Bank, said it had also been hurt by the sudden closure of the lender

“We had  invested good money with Imperial Bank  since I am also one of the shareholders but we are liaising with the Central Bank  of  Kenya on the way forward. Yes, one way or another the issue of freezing of  the account will affect  our operations but we are looking at alternative means to keep our operations alive,” said Jinit Shah,  one of the directors at Kenblest.

Mr Shah is one of the directors of Imperial Bank and is listed as owning 2.5 per cent of the bank in his individual capacity.

Kenblest is the biggest bread maker in Kenya, with capacity to produce 330,000 loaves per day. It is owned by Mr Shah and two other brothers.

Phyllis Omido, founder of the Center for Justice and Environmental Action (CJEA), Mombasa

We are currently surviving on an emergency grant from donors. We will not be able to operate in the next two months and we will be forced to shut down if the bank does not open its doors for us to access our money.

There is nothing they are saying and we do not even know why exactly they closed the bank.

Some insiders say the bank is liquid and that it could be because of the recent death of the bank’s chief executive that it has been placed under receivership.

Some employees also say that the bank managers are the ones who asked the Central Bank of Kenya to close the bank so that they could look into the issues.

The bottom line is that all our organisation’s money is locked up in there. We are now having board meetings to come up with emergency plans because we cannot stop our programmes from running.

One of our employees, a human rights activist, was recently released from jail and was banking on a Sh250,000 grant from our donors to start off his life after his house was brought down by a private developer and now he is stuck.

He is moving from one relative to another, together with his family because he does not have somewhere to call home. He does not even have a phone now.
We are now forced to rethink our banking options and we are not banking with small banks ever again.

Samuel Aloya, director Sunrise of Africa School in Kitengela

Mr Aloya, one of the directors and the executive administrators at Sunrise of Africa School in Kitengela, is watching events unfolding around Imperial Bank with keen interest.

“We want to remain optimistic,” said Mr Aloya, advising his staff to remain calm despite the sudden closure of the bank.

“Our school was founded on Christian values, which command us to ‘fear not’, but we are definitely praying for the problem to be solved soon.

Mr Aloya admitted that the lack of access to funds had put a number of projects on hold.

The school, which has been built almost entirely with donations from well-wishers, including churches and philanthropic foundations overseas, has been with Imperial Bank since 2004.

All of those funds flow into the school’s current account at Imperial Bank so there is cause for concern, Mr Aloya said.

But even as he is monitoring the situation online, he wants to believe the central bank, which has also counselled the public not to listen to rumours of bankruptcy.