Economic experts question BoU's methods in sale, closure of banks

Economic experts have questioned the methods used by Bank of Uganda in the sale or closure of  seven commercial banks.

This comes days after the Auditor General released a report that revealed irregularities in the sale and closure the banks.

The Auditor General instituted a special audit into Bank of Uganda after the parliamentary Committee on Commissions, State Authorities and State Enterprises ordered that the AG looks into the details of how some of the banks were sold.

There had been claims that the central bank did not follow due procedure in the closure/sale of some banks.

Indeed in his report, the auditor general established that there were no documented guidelines/regulations or policies in place for the identification of the purchasers of the three defunct banks; GTB, National Bank of Commerce and Crane Bank.

Dr. Fred Muhumuza, an economist, told The Nile Post the central bank needs to come clear on the procedures it used.

"Things should be done transparently because people have to know how the central bank handled the situation," Muhumuza said.

Muhumuza added that there is need for stringent rules and regulations in managing the banking sector because it is vital to the stability of the economy.

The banks that have been closed or sold by the central bank over the last two decades include; Teefe Bank which was closed in 1993; International Credit Bank Ltd that was closed in 1998; The Cooperative Bank in 1999; Greenland Bank in 1999; The National Bank of Commerce in 2012; Global Trust Bank in 2014 and Crane Bank which was sold to Dfcu in 2017.