The Court of Appeal has overturned a 2015 ruling that stopped the Kenya Deposit Insurance Corporation (KDIC) from liquidating Dubai Bank, signalling the end of the road for the troubled lender.
Justices Erastus Githinji, GBM Kariuki and Sankale ole Kantai ruled that their High Court counterpart, Eric Ogola, had overstepped his powers in stopping Dubai Bank’s liquidation.
Justice Ogola had asked the regulator to consider other solutions other than liquidation of the collapsed lender, a role that the Appeals Court, however, ruled is limited to the KDIC only.
The judge on November 18, 2015, issued an order barring the KDIC and the Central Bank of Kenya (CBK) from liquidating the lender, arguing that the move was premature.
He said the banking regulator knew that Dubai Bank was ailing and should have stepped in to solve its problems before ordering its winding up.
But the Court of Appeal ruled that the regulators were best placed to determine whether or not Dubai Bank was beyond rescue. “There is no evidence that the CBK and KDIC did not exercise their statutory discretion correctly.
The CBK and KDIC were best placed to deal with the improprieties and irregularities of Dubai Bank and the learned judge erred in imposing his own views in place of CBK’s views,” they judges ruled.
The CBK placed Dubai Bank under the KDIC’s care in August 2015 after the discovery of its shaky financial standing and exposure to depositors to the tune of Sh1.7 billion. Last year in August, the KDIC auctioned several assets owned by the lender in Nairobi and Nakuru as it began the liquidation process.