Photo: Jesse B. Awalt

Muammar al-Gaddafi (file photo).

The first team of Libyan officials from the new National Transitional government was expected in Uganda yesterday to review the operations of Tropical Bank, just a few hours after bank of Uganda handed the bank back to the majority shareholders, the Libyan government.

Among the issues the team is expected to look at is a renewed capital injection, quite possibly to rejuvenate the bank's operations as it would not be the first time for this to happen, but most importantly to meet Bank of Uganda's new minimum capital threshold of Shs 10 billion.

This would be the first significant intervention to lure customers back to the bank after a year of being placed under Central Bank supervision. Bank of Uganda took over Tropical bank, which is 99% owned by Libya, on March 25, 2011, after a resolution by the United Nations Security Council declared a freeze on all Libyan assets in foreign territories.

The resolution was passed to put pressure on Gaddafi to relinquish power, and also to ensure that Libya's foreign assets are run independently of the Tripoli regime. Bank of Uganda took over the bank to avoid a stampede by customers fleeing with their deposits. Osama Rime Serag, then managing director who Bank of Uganda asked to step aside, together with all the Libyans that held top positions in the bank, as it took over the bank, has returned to the helm. Serag will replace Prince Kassim Nakibinge, who acted as the interim Managing Director during BoU's takeover. Gerald Sendaula has, however, been retained as chairman of Tropical bank.

Serag said there is a likelihood "the government [the National Transitional Council] will have a newer view to the [operations of the] bank. We might increase capital."

Tumusiime-Mutebile, the Central Bank Governor, said the bank has made profits and met all the supervisory requirements. "The new management finds a solid bank, except that now it has more profits," he said. Mutebile said this on a basis of a special audit that was carried out on the bank to review the performance as at end of January 2012.

Tropical bank's actual financial performance will only be known within the next one month and a half, when it releases its books of accounts. Among the areas of interest will be how it made its profit at a time when suspicions of the bank's future reigned high. The bank's debt, and how it serviced it, will also be of interest to those trailing the bank. Another area to watch out for would be whether Tropical bank received any capital injection during the last 11 months, and who the source of this money is.

Nevertheless, Prince Nakibinge said the bank's total assets were in the region of Shs 250 billion. He said this places the bank in a position of between 11 and 12 among the biggest banks in Uganda in terms of assets. Bank of Uganda's takeover of Tropical went hand in hand with the freezing of assets belonging to Uganda Telecom - another Libyan owned entity.

The freezing of utl's assets has hurt the firm financially, making it difficult for the telecoms company to service its debts and meet its tax obligations. Libyan officials, have, however, been to Uganda to try and get Uganda to unlock utl's funds. It is hoped that the reinstatement of the Libyan management at Tropical bank could also finally unlock utl's funds.