BoU "sweetened" Crane Bank deal with several waivers

Emerging information into the sale of Crane Bank to DFCU shows that officials in Bank of Uganda wrote off Crane Bank Ltd loans amounting to Shs600b through unclear circumstances.

A letter authored on January 25, 2017  by Justine Bagyenda to dfcu Bank Managing Director Juma Kisaame, the former executive director at Bank of Uganda in charge of supervision listed a number of waivers, as sweeteners. 

She allowed dfcu 60 days to integrate assets of Crane Bank Ltd, and to report separately on the assets acquired and liabilities assumed from the controversial transfer, presided over by the central bank.

“All fully provisioned and advanced acquired by DFCU will be ring-fenced and managed separately and will not be part of the DFCU loan portfolio for reporting purposes until rehabilitated in conformity with the Financial Institutions Regulations, 2005,” she wrote.

The central bank in October 2016 closed Crane Bank, previously one of the best performing banks before controversially selling it dfcu Bank in January 2017 for a paltry Shs 200 billion.

On Monday, Katimbo Mugwanya, a former director at BoU who was appointed Statutory Manager for the sale of Crane Bank, admitted that he had bungled up the calculations on how the money that was injected in Crane Bank was calculated, leaving the committee with no option but to adjourn the hearing.

 Bagyenda, who was the executive director of commercial banks supervision when Crane Bank was closed, indicated that the bank required an additional capital of at least Shs32b by September 15, 2016 and progressive capital of Shs56b if capital adequacy was to be restored by October 31, 2017.

The Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) is conducting an inquiry into the conduct of Bank of Uganda and it’s officials in the closure of seven banks, with some ending up in massive controversy.

The MPs’ inquiry is based on a special audit report by the  Auditor General Mr John Muwanga into the sale/closure of seven banks which include: Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and the sale of Crane Bank Ltd (CBL) to dfcu (2016).