Failure to disclose ownership and source of funds has seen the banking industry regulator turn down seven proposals by foreign and local firms that had expressed interest to inject capital and revive the collapsed Dubai Bank.
The Central Bank of Kenya (CBK) has filed in court a list of seven companies that sent inquiries about investing in Dubai Bank, but says none of the suitors met the legal requirements for owning a bank.
The High Court last November ordered the industry regulator to consider proposals by investors to rescue the lender, a position that was upheld by the Court of Appeal in March.
The CBK shut down Dubai Bank in August, citing serious cases of parallel banking, a mountain of unsecured loans that were not being serviced, interference with client accounts and a lack of a full organisational chart as provided for by the law.
But the lender’s second-largest depositor, supplies firm Richardson & David, has since obtained a court order from the High Court and Court of Appeal barring the regulator from liquidating Dubai Bank.
The supplies firm argued that there are offers from potential investors on the table to revive the lender.
Sovereign Financial Holdings (Virgin Islands), Ark Fincap Private Limited (India) Nedebe Group (South Africa), Longitude Finance (Kenya), Zen East Africa (Kenya), Manaa Bin Hasher Al Maktoum Investments (Dubai) and International Investment Consortium Limited (Malaysia) wanted to inject capital and revive Dubai Bank.
“Names and other details of the directors and senior officers of the company were not submitted. Documentary evidence of sources of capital was not submitted. Full disclosure of any association with officers of Dubai Bank was not made.
“The proposal by International Investment Consortium Limited has therefore failed,” the CBK says of a Malaysian firm that wanted to inject $50 million (Sh5 billion) capital.
The CBK also says in its report filed in court that the seven companies wanted to take up majority shareholding in Dubai Bank, while the law only allows one individual or entity to own a maximum of 25 per cent of a financial institution.
Dubai Bank’s insolvency, as declared by the CBK, has put its largest depositors in a tight spot with the lender’s total liabilities standing at more than Sh2 billion or twice the amount savers had in their accounts.
The CBK holds that the lender can only be revived with a capital injection of Sh4.3 billion, which cannot come from one individual or company.
Richardson and David wants Dubai Bank placed under receivership, and has expressed readiness to convert its Sh142 million deposits into shareholding in a last-ditch effort to save the lender from collapse.
The supplies firm says other big savers are willing to follow the same step to save Dubai Bank.
Sovereign Holdings, Zen East Africa and Nedebe Group wanted to inject $20 million (Sh2 billion). International Investment Consortium said it was interested in pumping $5 million (Sh5 billion) with Manaa Bin Hasher Investments taking up Sh3 billion.