Imperial Bank to get Sh375.9m from sale of its Uganda unit
Imperial Bank in Nairobi. The bank’s 58.6 per cent stake in Ugandan subsidiary has been sold to Exim Bank. PHOTO | FILE
What you need to know:
Imperial Bank Kenya’s 58.6 per cent stake in its Ugandan subsidiary was sold to Exim Bank for $6.8 million (692.4 million).
Imperial Bank Uganda was set up in 2010 at a cost of Sh448 million.
The collapsed Imperial Bank Kenya is set to receive about Sh375.9 million ($3.7 million) following the sale of its majority stake in Imperial Bank Uganda to Tanzania’s Exim Bank.
The Central Bank of Kenya (CBK) on Tuesday disclosed that Imperial Bank Kenya’s 58.6 per cent stake in its Ugandan subsidiary was sold to Exim Bank for $6.8 million (692.4 million).
The Sh316.5 million balance between the sale price and the amount to be remitted to the Kenyan unit will be used to cover transaction costs and liabilities of the Ugandan operation.
The Kenya Deposit Insurance Corporation (KDIC), the receiver manager of the collapsed Imperial Bank Kenya, will receive the amount.
“CBK is very supportive of BOU’s actions, exercising its statutory powers as the regulator in that jurisdiction and seeking an outcome that does not jeopardise financial sector stability,” the regulator said in a statement.
“These shares in Imperial Bank (Uganda) Limited were sold to Exim Bank (Uganda) Limited for the sum of $6.8 million in an effort to quickly recover funds for the benefit of all IBL depositors.”
Exim Bank, one of the largest banks in Tanzania that also has subsidiaries in Djibouti and the Union of Comoros, appears to have acquired the stake at a considerable bargain.
Imperial Bank Uganda was set up in 2010 at a cost of Sh448 million.
It had grown to a network of six branches in the land-locked East African economy. The lender valued its investment in the subsidiary at Sh858 million at the end of 2014, when its gross assets stood at Sh7.9 billion.
FTI Consulting, forensic auditors appointed by Imperial Bank shareholders, last month said that the sale of the majority shareholding was expected to raise nearly double what has been achieved.
“Sale of the majority stake in Imperial Bank Uganda is estimated to raise Sh1.25 billion. Imperial Bank Uganda was unaffected by the funding gap in Kenya and can be sold as a going concern,” the audit firm said in a report.
Proceeds from this sale were to help fill the funding gap in the collapsed Kenyan entity, which is estimated at Sh38 billion.
This week’s transaction has whittled down the bank’s assets, leaving shareholders and creditors with the lender’s Kenya assets to contend over. BoU placed Imperial Bank Uganda under receivership in October last year, following a similar action on the parent company by the Central Bank of Kenya (CBK) as accounts of fraud at the lender surfaced.
Emmanuel Tumusiime-Mutebile-- BoU’s governor-- on Monday announced that the institution had terminated the statutory management of the bank following the transaction, whose value they did not disclose.
He also said the bank had consequently assumed the new name of Exim Bank (Uganda) whose operations, he said, would continue normally.
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