BoU confirms: "DFCU will exit Crane Bank properties"

DFCU Bank has started preparations to exit 48 properties that belong to Meera Investments Limited, Bank of Uganda has confirmed.

In its 2018/19 annual report, the central bank said DFCU had indicated to them that they will exit the properties in the wake of a legal suit.

“As part of rescinding of this purchase, dfcu will return to BoU Certificates of title for Meera Investments Limited properties and requires BoU to pay to dfcu Bank Limited the net book value of the properties recorded in the assets and inventory compilation report as at October 20, 2016," noted part of the report.

The bank said the decision had been taken in the wake of a court ruling which dismissed a case BOU had filed against Crane Bank (In receivership) on a technicality.

It did not give a deadline as to when the relocation will be completed.

The confirmation puts to rest confusion regarding DFCU’s decision early this month to employ the services of a consultant to help them come up with a relocation plan from 22 properties that belong to Meera Investments Limited.

Meera Investments Limited is part of the Ruparelia Group of Companies.

DFCU had initially claimed that  the reports were not true and that they were simply aligning their operations “digitally.”

However, from the BoU report, it is clear that DFCU is moving towards this direction.

Last year, Meera Investments sued DFCU demanding unpaid rent arrears believed to be billions of shillings. It had been revealed in August that DFCU had moved to transfer some of the properties into its names.

Lawyers described this move back then as illegal.

The bank has been operating its business in buildings/properties belonging to Meera Investments Limited since it acquired Crane Bank Limited in 2017.

The origin

The dispute Bank of Uganda on October 20, 2016 closed Crane Bank Ltd, previously one of the best performing banks at Shs 200 billion to dfcu Bank.

The dfcu Bank received some of the assets and liabilities of Crane Bank and started to operate in different branches whose ownership belonged to Meera Investments Ltd.

Between 2012 and 2016, Meera leased the 46 properties to Crane Bank on different terms with the leases being duly registered as encumbrances on Meera’s freehold and mailo interest.

The lease titles were subsequently processed and issued to Crane Bank. Crane Bank agreed to pay US$6,000 as ground rent for each of the properties effective on or before the January 1, of every year to the property owners (Meera Investments).

The lease agreements, court documents show, provided that Meera had the option to review the ground rent after the expiry of three years.

On January 24, 2017 Bank of Uganda announced that it had transferred all the assets and liabilities of the bank to dfcu Bank.

But lawyers said this was an illegality because the consent of the owner was not sought.

They argued that at the execution of the transfers in favour of dfcu and at the time of causing the transfer of the leasehold interest into the names of dfcu, the registration of Meera as the proprietor of the freehold and mailo was and is still intact.