Bank of Uganda has put Crane Bank under receivership, takes over management with immediate effect.
Our reporters have sighted police officers instead of the usual Nepalese guards at the Bank’s branches across the Uganda.
Central Bank Governor Tumusime Mutebile said: “Crane Bank is under-capitalised and poses systemic risk to the banking sector. Board of Directors of Crane Bank suspended but I can still confirm that Crane Bank is the third largest bank in Uganda..
“The bank remains open to customers under the management of Bank of Uganda.
“Crane Bank has been on the Bank of Uganda watchlist since September 2015 after regular onsite tests and external audit report.
“Crane Bank capital had fallen below the 50% legal requirement under the law.
“BOU to conduct audit on Crane Bank to determine whether the high non-performing loan and bad debts contributed to the capital erosion.
Prior to this development, Crane Bank was negotiating with investors to acquire an unknown stake in the bank.
“This is to inform you that Bank of Uganda has, with effect from today 20th 2016, pursuant to to Sections 87 (3), 88 (1)(a) & (b) of the Financial Institutions Act 2004, taken over management of Crane Bank Ltd. You are accordingly suspended from your position as Acting Managing Director and you are required to make a formal handover of your responsibilities to the Bank of Uganda Statutory Manager, Mr Edward Katimbo Mugwanya,” read part of the statement signed by Bank of Uganda governor Emmanuel Mutebile.
The proprietor, Mr Sudhir Ruparelia admitted that he hadn’t yet sought Bank of Uganda clearance on the proposed share sale in Uganda’s fourth largest bank by assets.
Did Kalani cause fall?
The bank has had a rough time for the past few years following the unexplained disappearance of talisman A.R Kalan. Under Kalan, Crane Bank threatened Stanbic bank and ChartChart in terms of turnover and net profits.
In 2014, rumour spread on social media with allegations that the bank had been robbed of money worth US$ 18m, with other sources putting the loss at Ugx. 60 billion. A claim which Mr. Biribonwa refuted, explaining that Kalan had gone on leave. Four years later, Kalan is yet to return.
Crane Bank turned up one of the worst performances since inception in 2015. The bank turned a net loss of Shs3.3bn in 2015 from a net profit of Shs50.6b in 2014.
This slump was attributed to an increase in Non-performing loans and provisions for bad debts as companies fell back on loan repayments. Since 1997, the bank had been witnessing a consistent upward trend in profit until 2015.
It also ceded third place to Centenary Bank in terms of assets and customer deposits. If approved, this will be second bank to change shareholding in the last two years.
More details to follow
