The Kenya Deposit Insurance Corporation (KDIC) is scheduled to wind up two collapsed lenders, Ari Bank and Reliance Bank, serving as the last rights for the institutions under liquidation for decades. As of liquidation, Ari and Reliance banks had loans of USD 3.55 million and USD 11.58 million, respectively.
The process of winding up a business involves paying creditors, distributing any remaining shareholder assets, and liquidating stock.
The KDIC issued a request for proposals regarding the provision of legal and audit services related to the banks’ winding down.
The total amount of deposits at Ari Bank Corporation Limited was Ksh287,000 (USD 2,238), and the bank was placed into liquidation on December 5, 1997.
KDIC stated that as of the end of June 2021, it had distributed Ksh6,000 (USD 46.8), or 55% of the institution’s protected deposits, out of a total of Ksh11,000 (USD 85.8).
Similarly, at the end of the same period, the KDIC revealed that Ksh45 million (USD 0.351 million) had been paid to creditors and uninsured depositors.
Reliance Bank Limited had total deposits of Ksh969,000 (USD 7,483) when it was placed into liquidation in September 2000.
About Ksh88,000 (USD 679) of the deposits were safeguarded by KDIC, which has already disbursed Ksh57,000 (USD 440).
Furthermore, as of June 2021, the KDIC had distributed Ksh142 million (USD 1.1 million) to the bank’s creditors and unsecured depositors.
As of liquidation, the two banks owed Ksh453 million (USD 3.5 million) and Ksh1.5 billion (USD 11.58 million), respectively.
KDIC recovered Ksh1.8 million (USD 13.9 million) and Ksh46,000 (USD 355) from these loans.
Nine other banks have been wound up, including Allied Credit, International Finance Limited, Trade Finance, Diners Finance, Nairobi Finance, Inter-Africa Credit Finance, Central Finance, Heritage Bank, and Fortune Finance. Ari and Reliance are anticipated to join this group.
When bank failures in Kenya reached an all-time high, all nine of the troubled lenders were placed in liquidation, between 1993 and 2000.