By Mubiru Ivan
Bank of Uganda officials have on Tuesday failed to explain how they arrived at Shs297 billion figure of under capitalisation that led to its statutory take over of Crane Bank thus prompting the chairperson of the Parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) to adjourn the probe to Wednesday.
After the take over in 2016, BoU said Crane Bank operated without sufficient capital.
Governor Emmanuel Tumusiime-Mutebile said the continuation of Crane Bank’s activities in its current form is detrimental to the interests of its depositors. “This action has been taken upon a determination by BoU that Crane Bank Ltd is a significantly undercapitalised institution as defined by law,” he said.
However, on questioning how they they determined that the commercial was under capitalised, all the Central Bank officials appearing before the committee failed to give an explanation to the query.
Cosase is investigating circumstances under which BoU officials controversially sold off seven defunct banks. These are Tefee Trust Bank, Greenland Bank, International Credit Bank (ICB), Cooperative Bank, Global Trust Bank, National Bank of Commerce (NBC) and Crane Bank Limited.
On Monday, Abdu Katuntu said officials, led by then Director, Supervision of commercial banks, Justine Bagyenda ‘simply hawked’ off NBC.
NBC was formed in 1991 by Amos Nzeyi, Amama Mbabazi and Ruhakana Rugunda as well as Ezra Suruma, Jim Muhwezi and retired Supreme Court judge George Wilson Kanyeihamba.
“You’re hawking this bank (NBC). You know, for you to get phones and start calling people and saying ‘there is a bank here, will you buy, will you buy it?’ yet at this point you’re neither a statuary manager, you’re neither a receiver, neither are you a liquidator is nothing other than hawking,” Katuntu told Ben Sekabira, the director financial markets development coordination at the BoU.
Sekabira, had earlier said NBC’s potential buyer was identified via phone calls between Bagyenda, legal counsel Margaret Kaggwa, lawyers from Max Advocates and former Crane Bank managing director A. R. Kalani.
Dissolved in 2012, the assets and liabilities of the National Bank of Commerce (NBC) were transferred to Crane bank when the central bank indicated that its activities were detrimental to the interests of its depositors.
“That process to identify who the acquirer bank could be, was conducted on phone. I want to be on record that Bagyenda confided in me and told me what she did. We did not place the calls together but she confided in me because it’s a confidential process,” Ssekabira told Cosase.
He was not done, insisting that that was how banks are often sold off.
“You call an acquirer and do not even you tell them which bank it is they are acquiring or the any information. You just say ‘we have an institution that you could possibly be interested in. Do you want to transact?” Sekabira submitted.
Earlier today, Bagyenda told the committee that she sold defunct banks non-performing loans at a discount
“It’s true that we sold off the Non-performing loans at 35 per cent and the secured performing loans at a discount of 30 per cent of National Commercial bank, because we thought that it was in line with the law,” she said.
But Katuntu pointed out that it is not in dispute that there is no documentation with regards to the closure of NBC, but rather, the closure was done in a haphazard manner.
“Is it correct for bank of Uganda to have Directors of the Commercial Bank to be the principal Legal advisors to the regulators?” Katuntu asked.
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