By Benadeta Mwaura - Reporter
Kenya, August 11, 2026 - Kenya's decision to place Chase Bank, Imperial Bank and Dubai Bank under receivership was necessary to protect depositors and prevent problems at individual institutions from threatening the wider financial system, former Central Bank of Kenya Governor Patrick Njoroge has said.
Njoroge, who served as CBK governor from 2015 to 2023, reflected on the interventions during discussions on Kenya's banking sector, explaining why the regulator could not allow troubled institutions to continue operating when their financial and governance problems posed risks to customers and the wider economy.
The three banks were among the institutions that faced regulatory intervention during a turbulent period for Kenya's banking industry.
Imperial Bank was placed under receivership on October 13, 2015, after the CBK cited irregularities and malpractices that exposed depositors, creditors and the banking sector to financial risk. The Kenya Deposit Insurance Corporation (KDIC) was appointed receiver.
Less than six months later, Chase Bank was placed under receivership on April 7, 2016.
According to CBK documents, the intervention followed the existence of unsafe and unsound conditions, the bank's likelihood of failing to meet its financial obligations, violations of banking laws and regulations and substantially insufficient capital.
The interventions were not simply about individual banks failing to make money. They were about whether the institutions remained sufficiently safe for customers to entrust them with their savings.
A bank occupies a unique position in an economy because it holds money belonging to millions of individuals and businesses while also providing credit to the economy.
When confidence in a bank collapses, the consequences can spread rapidly.
Depositors may rush to withdraw their money, potentially creating a bank run and making an already weak institution even more vulnerable.
That is why banking regulators have powers to intervene before an institution reaches complete failure.
In the case of Imperial Bank, CBK said the action was taken under the principle of prompt corrective action to address unsafe banking practices. The regulator said the intervention was intended to protect depositors and creditors while providing a platform for the bank's affairs to be resolved.
The Chase case also illustrates that receivership does not necessarily mean that every part of a bank's business is worthless.
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After taking control of Chase Bank, regulators reopened the institution on April 27, 2016, with KCB Bank Kenya appointed to manage it.
A subsequent CBK and KDIC assessment concluded that the problematic activities were not endemic to the bank's entire business and that its core operations had merit.
The regulators consequently began looking for an investor who could recapitalise and develop the institution under improved management, governance and oversight.
This distinction is important because the regulator's objective was not necessarily to destroy a bank, but to protect its viable operations and the interests of depositors while dealing with unsafe practices.
The closures became an important turning point for Kenya's financial sector, forcing regulators and banks to place greater emphasis on governance, capital adequacy, risk management and transparency.
For depositors, the episode also demonstrated why the stability of a bank matters just as much as the interest rate or products it offers.
The CBK has repeatedly maintained that regulatory intervention is intended to preserve confidence in the financial system.
The Imperial Bank case, for instance, saw KDIC assume control of the institution's assets, liabilities, business and affairs while investigations were undertaken to establish the extent of irregularities and determine an appropriate resolution mechanism.
Ultimately, Njoroge's explanation puts the banking failures into a broader perspective: sometimes the most disruptive action a regulator can take is also the action intended to prevent a much bigger financial crisis.
The challenge, however, remains ensuring that such intervention happens early enough to protect depositors while strengthening supervision so that unsafe practices are identified before they become systemic threats.