Over the past couple of years as debate raged within Bank of Uganda as to whether Crane Bank had become insolvent, the two most senior executives at the central bank expressed contradictory opinions, documents and information skimmed by The Nile Post reveals.

Prof Emmanuel Tumusiime Mutebile, the central bank’s governor and Dr Louis Kasekende, his deputy, gave contradictory statements about the state of the health of Crane Bank, the information we have shows.

In December 2016, while speaking at the Annual Bankers Dinner Mutebile said that “Crane Bank was too big to fail.”

That was after the central bank had taken over the operations of Crane Bank to prevent it from total collapse and injected in Shs 200 billion to keep it afloat.

Then Mutebile appeared to suggest that Crane Bank’s liquidity problem did not run too deep and therefore the abnk could be stabilised.

After the stabilisation, it would hand it back to the owners to run it.

Nile Bank Scenario

This is reminiscent of the Nile Bank days which in the early 1990s was temporary taken over by the central bank after it experienced liquidity problems.  Charles Nyonyintono Kikonyogo, the then central bank governor took the tough decision ignoring pleas from the bank’s major shareholder, Gordon Wavamunno. After three months, Nile Bank was handed back to the shareholders and it became profitable again. In 2007, the shareholders sold the bank to Barclays Bank Uganda.

In Crane Bank’s case, the bak was sold to DFCU in January 2017, less than a month after Mutebile’s statement.

It is has become clear why this was so.

Kasekende’s statement

Speaking at the 20 year Anniversary Dinner for Uganda Securities Exchange (USE) on April 6 2018 at Serena Hotel Kampala, Kasekende said Crane Bank was not sold to DFCU.

It was handed over “because no one would have bought a bank with a negative net-worth of this magnitude.”

Kasekende further alluded to internal borrowing as being the cause of the bank’s weak liquidity position.

Kasekende’s statement now seems to suggest that the bank’s financials were too weak and that “talk of the bank being too big to fail” were hollow.

It also means that the injection of Shs 200 billion into Crane Bank by the central bank was like a drop in the ocean.

Some experts have questioned how BOU conducted a liquidation process of a bank whose operations it was still managing as Mutebile alluded to at the 2016 dinner.

This rushed sale has since become the basis on which Crane Bank shareholders have instituted a civil case in the Commercial court division of the High Court of Uganda.