Justine Bagyenda and Louis Kasekende are responsible for the closure of the National Bank of Commerce, the Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) was told on Monday, February 04, 2019.
The shareholders of the defunct National Bank of Commerce (NBC) including former prime minister Amama Mbabazi, were appearing before the Cosase, which has less than three weeks to present its findings before Parliament.
Led by the then Board Chairman Mathew Rukikaire, NBC owners denied before Cosase that their bank was undercapitalized below Shs10 billion which was the reason offered for its closure. Instead they laid blame on the former Bank of Uganda director supervision Bagyenda who made it impossible for the bank to carry out its functions normally.
Now, NBC shareholders want government to fork out Shs295bn for losses and damages caused by the illegal closure of their bank.
The powerful NBC delegation including Mbabazi, Amos Nzeyi and Justice George Wilson Kanyeihamba said the bank was closed on September 27, 2012 however they had followed guidance offered by the Central Bank only for BoU official to deny NBC a lifeline by cutting off hands that fed it.
Former privatisation minister Rukikaire blamed Bagyenda for directing that the Shs7 billion capital they raised be invested in treasury bills and restraining the board and management from using these treasury bills for banking business which frustrated the bank’s efforts to use the new capital to generate income for the bank.
Yet, the BoU continued piling pressure on them that complaining that the capital of the bank was being eroded, which in their wisdom was the BoU acting in bad faith.
Rukikaire said they had raised Shs7bn in four days to meet BoU requirements only for the bank to be closed.
“NBC invested over US$1.7 million into a state of the art headquarter as well as investing over US$1.2 million in acquiring a new core banking software, TENENOS T24 which had been installed and was fully operational.”
Rukikaire said BoU had unjustly insisted on expensing all of the new investments and assets.
He says by the time of the closure, the NBC had 97% of the required minimum capital yet the law puts minimum requirement at below fifty percent hence citing intrigue and conspiracy at the Bank of Uganda as the major driver into the closure of their bank.
According to Rukikaire, in a public notice issued by BOU Deputy Governor, Dr. Louis Kasekende, it was claimed that the takeover, winding up and immediate purported sale of NBC to Crane Bank was done to protect the interests of depositors and maintain the stability of the financial secto, which was far from the truth since NBC depositors’ interests were not under any threat at the time of the closure.
Cosase is probing the closure and disposal of defunct commercial banks 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 Crane Bank Ltd (CBL).
Cosase chairman Abdu Katuntu notes that by February 22, the committee will have finished its report and hand it over to parliament.