Former Bank of Uganda Executive Director in charge of Supervision, Justine Bagyenda ordered DFCU executives to keep Crane Bank’s bad books off the record.
“The assets acquired and liabilities assumed will be reported separately from DFCU’s balance sheet for the 31st January 2017 end of month reporting to BoU. The first consolidated balance sheet will be that of 31st march 2017,” Bagyenda wrote to DFCU’s Managing Director
The letter dated January 25, 2017 was shortly after DFCU’s takeover of Crane Bank.
“The non- performing loans and advances acquired by Dfcu will be managed and reported on separately from Dfcc’s pre-transaction balance sheet for a period of at least twelve months.” Bagyenda went on.
The bad books are records indicating details and securities of people that take loans from any lending institution. However, despite Dfcu being given CBL by BoU, it wasn’t mandatory for them keep bad books because they belong to shareholders of CBL.
Bagyenda said that any acquired performing loans and advances reflected on DFCU’s balance sheet at integration will be deemed and treated as new to DFCU and hence eligible for restructuring for purposes of the financial Institutions (credit classification and provisioning requirement. She also directed that all fully provisioned loans and advances acquired by DFCU will be managed separately and would not be part of DFCU’s loan portfolio for reporting purposes until rehabilitated in conformity with the Financial Institution Act.
“At integration, DFCU will apply its AML/KYC and customer due diligence standards to the CBL customers and following integration, any accounts that do not conform to and which cannot be brought into conformance with DFCU’s AML/KYC standards will be closed and any balance thereon returned to the affected customers, where reachable, or to BoU where the customers cannot be found for appropriate management” she wrote.
“DFCU will rationalise the acquired CBL branch network in accordance with its strategic plans and operational requirements, which may result in the closure of some branches. DFCU will carry some non-core assets acquired pursuant to the agreement including land and buildings on its balance sheet for at least 36 months,” she further directed.
Bagyenda was in February this year relieved of her duties at BoU.
BoU officials are currently in Parliament to answer queries from MPs following an Auditor General report that indicated there was connivance between Central Bank officials and DFCU over the acquisition of Crane Bank. The AG’s report also looked into the closure and take-over of several other banks.
Sources say Bagyenda’s directive was done in connivance between Deputy Governor Louis Kasekende, outgoing Dfcu MD Juma Kisaame DFCU bank limited board chairman Jimmy Mugerwa and lawyers David Mpanga of Bowmans and Timothy Masembe of MMASK Advocates who were thrown off the Crane Bank case after court ruled that they were conflicted.
