Uganda: Bou Officials Disagree Over Crane Bank Capitalisation

11 December 2018

Parliament — Queries remain over how much money Crane Bank required for it to remain in business after Bank of Uganda(BoU) officials failed to give a comprehensive figure on how undercapitalised the bank was when the Central Bank decided to shut it down and later sell it to dfcu.

Governor Emmanuel Tumusiine-Mutebile Tuesday told MPs investigating the disputed closure of banks that he does not have figures on Crane Bank's undercapitalisation, triggering furious rebuttals over why the Central Bank concluded that Crane Bank was in an untenable financial situation and the only option was to close it without definitive figures on its books of accounts.

"I don't have a figure for its undercapitalisation but I know what we demanded to put in place," the Governor told MPs.

Mr Mutebile's position that he did not have figures regarding Crane Bank's undercapitalisation was contradicted by Mr Benedict Ssekabira, the Director Financial Markets Coordination, who said Crane Bank required further injection of Shs157b for it to remain afloat.

"Capital is a moving target. It is ongoing target-moving all the day so you must know at what time you have measured. You can give a number today and a different number tomorrow," Mr Ssekabira said as he defended fluctuating figures.

On the other hand, Ms Justine Bagyenda, who was the director of commercial banks supervision when Crane Bank was closed, indicated that the bank required an additional capital of at least Shs32b by September 15, 2016 and progressive capital of Shs56b if capital adequacy was to be restored by October 31, 2017.

Crane Bank was closed on October 20, 2016 and dfcu took it over in January 2017.

"On July 1, 2016, BoU instructed Crane Bank to inject additional capital of at least Shs32b by September 15, 2016 to rectify the significantly undercapitalised [reserves] and to progressively inject capital of at least Shs56b in order to restore the bank to capital adequacy by October 31, 2017,"Ms Bagyenda said.

Queries over how much money was injected in Crane Bank by the government will, however, remain as it had emerged in 2016 that the government had used Shs200 billion worth of taxpayers' money in unsuccessful attempts to prevent the bank from collapsing.

Mr Katimbo Mugwanya, a former director at BoU who was appointed Statutory Manager for the sale of Crane Bank, admitted that he had bungled up the calculations on how the money that was injected in Crane Bank was calculated, leaving the committee with no option but to adjourn pending definitive figures tomorrow.

[email protected]

See What Everyone is Watching

More From: Monitor

Don't Miss

AllAfrica publishes around 600 reports a day from more than 150 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.