Central Bank of Kenya orders closure of Dubai Bank
By JOSHUA MASINDE of daily nation—The Central Bank has on Monday ordered the closure of Dubai Bank for failure to pay its debtors and for flouting regulatory rules.
The lender had on August 14 been put under receivership following “violations of banking laws and regulations, including failure to maintain adequate capital and liquidity ratios as well as provisions for non-performing loans and weak corporate governance structures”.
It said that such violations and indebtedness were detrimental to the interests of its depositors, creditors and public.
The liquidation of the lender now marks the end of an era of a bank that has in the past three years been in the news on allegations of failing to pay its debtors, crediting the accounts of its clients for payments made. Cracks emerged when the lender’s chairman and principal shareholder, Mr Hassan Zubeidi, fired his managing director, Ms Nereah Said, after she accused him of abetting fraud and theft of clients’ funds at the bank.
On Monday, the Kenya Deposit Insurance Corporation (KDIC) made a recommendation to the CBK to liquidate Dubai Bank.
“The KDIC report indicates that considering the magnitude of weaknesses of Dubai Bank Kenya Limited, liquidation is the only feasible option,” the CBK, which had tasked KDIC to review the lender and propose a way forward for its future, said.
CBK has also appointed KDIC as liquidator of Dubai Bank Kenya.
“At this point, all insured deposits shall be paid by KDIC up to a maximum of Sh100,000 per depositor. Any balances above this amount shall equitably be paid as and when the liquidator accumulates enough funds from sale of assets of the collapsed Bank and recoveries from outstanding loans and debts,” the corporation’s acting chief executive officer, Mr Aggrey Bett said recently in a statement.