The Central Bank of Kenya (CBK) has ordered the closure of the Dubai Bank’s Kenya unit due to its inability to pay its debtors and for flouting regulations.
The bank will be liquidated on the recommendation of the Kenya Deposit Insurance Corporation (KDIC) that was appointed by CBK as a receiver for Dubai Bank Kenya on 14 August in view of its serious liquidity and capital deficiencies.
The recommendation was premised on KDIC’s review of Dubai Bank Kenya which indicated that the magnitude of weaknesses in the bank left liquidation as the only feasible option.
CBK said that such violations and indebtedness were detrimental to the interests of its depositors, creditors and public.
"The non-compliance with the cash reserve ratios has to date attracted a total penalty of Sh5.4m," said the regulator.
Dubai Bank has also not been able to honour its financial obligations, including Sh48.18m that is due to the Bank of Africa.
The decision for liquidating the bank comes days after a CBK report revealed a marginal drop in the liquidity ratio of commercial banks from the 39.9% in March to 38.7% in June.