Sudhir demands for return of banks’ bad loan book


By Deo Wasswa

The vice chairman of the defunct Crane Bank, Business man Sudhir Ruparelia has demanded for the return of the banks bad loan book which he values at UGX570 billion.

The bank was closed in October 2016 and sold to DFCU three months later.

Sudhir made the appeal during a presentation by shareholders of the bank before the COSASE.

According to the former chairman of Crane Bank Joseph Biribonwa The bank of Uganda had a premeditated plan to asset strip Crane bank and sell it to a preferred buyer.

He told Members of Parliament that the Bank Of Uganda frustrated the efforts by the share holders to bring in an equity investors.

Birobonwa had earlier told MPs that the liquidity crisis at the bank had been caused by an economic downturn in 2014/2015.

He blamed the BOU for causing loss of confidence in CB in April 2016 by halting the bank from issuing letters of credit, bonds and bank guarantees. In addition he said the BOU placed a lien on treasury bills held by CB worth 169bn.

These actions he said killed the bank since they caused capital flight and serious reputation damage.

The lien on treasury bills also led to equity investor Atlas Mara losing interest in Crane Bank.

He revealed that the shareholders had raised capital amounting to 8m dollars which funds were detained by BOU and not allowed in the bank.

He also disclosed that on 19th October 2016 Crane bank had agreed to terms of a loan from the central bank amounting to 79.2bn shs but the BOU moved to take over the bank that very night at 11pm.

He noted that BOU made the decision to sell Crane Bank in November 2016. This was less than a month after the takeover and in violation of the financial institutions act.

The chairman of Ruparelia Group who was vice chairman of the Bank Dr. Sudhir Ruparelia told the MPs that the shareholder of the bank demand the return of the bad loan book that was handed to Dfcu.

He demands for the return of 23.5 dollars raised by the shareholders and held by the BOU.

Uganda’s Parliamentary committee scrutiny for the defunct banks kick starts

The parliamentary committee on commissions, statutory authorities and state enterprises has today started scrutinizing  the closure of the  defunct banks by questioning the criteria which was used to close Teefe bank.

The committee chaired by bugweri county mp Abdul katuntu quizzed the officials of the central bank headed by the governor Tumusime Mutebile on how they could close this bank without knowing its liability and assets.

The auditor general in his report noted that some of the documentation of Teefe trust bank where denied to his office. The committee now discovers that this bank was closed without an inventory report, However bank of Uganda’s  deputy governor Louis Kasekende in response said that the law by then did not require them to fill an inventory
report.

“ The nature of documents required at that time did not include the inventory so we don’t have that inventory as of now.’’ `It is true that the Financial Institution statute specifically provides for it, but any institution that is acting prudently if you’re taking over a bank, you can’t move in an institution take it over without documenting what you’re taking over, Katuntu replied

The meeting has now been adjourned to Thursday this week to allow BOU reorganize itself and Provide to the committee the list of assets and liabilities that were taken over by the central bank at the time of dissolving the bank.

A special audit on the closure of Teefe Trust Bank and six others commercial banks by the central bank  was ordered  by the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) in November 2017.

The  committee ordered for  the  auditor after  discovering  that Bank of Uganda  had not  provided the liquidation agent and period for Teefe Trust Bank since it was closed 25 years ago, despite the BOU liquidating  the assets of the bank.

Teefe trust bank was closed in 1993, by the central bank as it was deemed bankrupt. The  special audit report of the Auditor General queried the mistakes  in the closure of Teefe Bank , International Credit Bank Ltd Greenland Bank ,  Co-operative Bank , National Bank of Commerce ), Global Trust Bank (2014) and recently Crane Bank Ltd.

The auditor also observed that there were no guidelines in place to guide the identification of the purchases of the defunct banks.

Former Crane bank employee meet petition the speaker over their lost jobs

By Deo Wasswa

The former crane bank employees led by their lawyer Isaac Semakadde have today petitioned the office of speaker demanding her to call them to hear their testimonies on how they were laid off from work and mistreated under the watch of central bank.

The petition requesting the parliament to summon the leaders of bank of Uganda and DFCU to show the cause why they should not be held reliable for covering the mistreatment of former crane bank employees.

They claim that during the crane bank take over, the agreement with central bank was no employee would lose his or her job.

In the same petition the Former employees of the defunct Crane Bank are also demanding for compensation of Shillings 48 billion from Bank of Uganda arising from breach of contract. Until October, 26th 2016 the group was being employed by Crane Bank.

Bank of Uganda took over Crane Bank on grounds that it was incapacitated, according to the law and would pose a systematic risk to the stability of the country’s financial system.

According to the employees, on February 24th, 2017 after the said takeover of Crane Bank, DFCU wrote a memo to its entire staff to the effect that several employees would be collectively terminated effective immediately.

They allege that the collective termination only targeted them purportedly due to assurances and inducements given to DFCU Bank and Bank of Uganda.

DFCU wins 13 institutions, takes over Crane bank

DFCU Bank Limited has taken over Crane Bank, more than four months after the Central Bank took control of what used to be Uganda’s third largest banking institution.

Bank of Uganda Governor Emmanuel Mutebile told journalists in Kampala this morning that the central bank has transferred all Crane Bank’s assets and liabilities to DFCU group adding that all customers and depositors of Crane Bank shall now have their accounts operated by DFCU Bank Limited.

Mutebile said DFCU emerged winner out of 13 institutions that competed to take over of Crane Bank.  He added that the sale was in exercise of the Central Bank’s powers as a receiver, under Sec 95(1)(b) of the Financial Intelligence Act.

Ibrahim Kabanda, a Board Member of Bank of Uganda defended DFCU’s takeover of Crane Bank saying it is a very strong bank supported by big institutions in Europe citing the Commonwealth Development Corporation (CDC) and others.

DFCU runs 47 branches across the country, some of which now include former branches of Crane Bank. Prior to its closure, Crane Bank had 46 branches across the country and an asset base of 1.79 trillion Shillings.

The central bank took over Crane Bank in October, 2016 upon determination that it was significantly under-capitalized and posed systemic risks to the stability of the financial systems. Back then, Mutebile said that the continuation of Crane Bank activities in the current form was detrimental to the interests of its depositors.

Problems within Crane Bank were first detected at the end of September 2015 after regular examination indicated that there was significant under-capitalization of the bank.

This was also confirmed in the auditor’s report of 2015 indicating that the Bank reported a consolidated pre-tax loss of over 7 billion Shillings during the year as a result of an increase in expenses and losses on loans and advances. This was a contrast of its 57 billion Shillings profits recorded in 2014.

The central bank governor explains that the problem was partially caused by a number of bad and doubtful loans that could have undermined the performance of the bank. He however adds that the management of the Bank takes a share of the blame for the crisis.

Justine Bagyenda, the executive director for supervision explains that a bank is declared as significantly under-capitalized, when its level of capitalization is less than 50 percent of the statutory requirement of 25 billion Shillings.

It has since then been managed by a statutory manager.

About DFCU

DFCU Limited was started by the Commonwealth Development Corporation (CDC) of the United Kingdom and the Government of Uganda through the Uganda Development Corporation (UDC) under the name of Development Finance Company of Uganda Limited.

Later restructuring brought in DEG (of Germany) and International Finance Corporation (IFC) as equal partners with CDC and UDC, each having a 25 percent stake in the company. Its objective was to support long-term development projects whose financing needs and risk did not appeal to the then existing financial commercial lending institutions.

DFCU Limited was incorporated under the Laws of Uganda on the 14th of May 1964, as a Private Limited Liability Company. In 1999, DFCU acquired Uganda Leasing Company which became DFCU Leasing, to provide direct asset based finance.

 

 

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BANK OF UGANDA TAKES OVER CRANE BANK

By Moses Kidandi

Bank of Uganda has taken over management of crane Bank.

in a statement from the central Bank  the central Bank revoked section 87-1 and 88-1 of the financial institutions act 2004 to take the decision.

the statement issued by the Governor of the central Bank Tumusiime Mutebile has also suspended the Board of directors of crane Bank.

However the central Bank maintains that none of the staff of crane bank will be affected.

Tumusiime Mutebile in a statement to staff of crane Bank says the Central Bank will continue with the Banks management and has asked the staff to corporate so as to have the Bank continue running normally under new management.