Finance minister Matia Kasaija (left) addresses participants during a
breakfast meeting organised by Uganda Bankers’ Association yesterday at
Kampala Serena Hotel. Looking on is the association chairman Fabian
Kasi. PHOTO BY MICHAEL KAKUMIRIZI
Kampala.
The government has confirmed that at least three prospective investors have already expressed interest in acquiring the troubled Crane Bank. Finance minister, Matia Kasaija, told a meeting organised by the Uganda Bankers Association (UBA) yesterday. Mr Kasaija said government would run the bank until the right investor is found.
“We are going to run that bank and it will survive. Once it has survived, we have already seen people who want to come in and invest some money. We already have three suitors who want to come and put in money. The bank will remain. No bank is going to be closed,” he said.
Mr Kasaija did not reveal names of people who have expressed interest in the bank. On Thursday last week, Bank of Uganda (BoU) announced it had taken over the management of Crane Bank and disbanded the board because it had been operating below the capital buffer requirement. BoU has itself been non-committal on how long it will take to find buyers. Prof. Emmanuel Tumusiime-Mutebile, the BoU governor on Thursday could not make any projections but pointed out that they will have to first complete an audit on the bank before making any decisions.
According to the Financial Institutions Act 2004, when BoU takes over a bank: “Where the financial institution does not comply with prudential standards within six months after its being placed under statutory management, the Central Bank shall close the financial institution and place it under receivership.”
BoU had not responded to questions regarding the procedure by press time. And BoU has, on several occasions, insisted that it doesn’t comment on specific business of commercial banks.
Loans to blame
Mr Kasaija also played down talk that the bank was closed over poor management. He instead notes that it was a problem of non-performing loans (NPLs) that ate into the capital base of the bank.
“If we had moved in earlier, my friend Sudhir (Ruperelia) would have said you are robbing my bank. And that would become another issue. The bank was doing well up to 2014.
I don’t know what happened in 2015 but from the figures, these people were giving me is that we begin to see bad non-performing loans so they begin to eat into bank profits. When they eat into the profit, they started eating into the capital,” he said.
He, however, criticised management for not doing enough to scrutinise who it was lending to leading to a large number of NPLs.
Estimates point out that as at June 2016, NPLs in the banking sector totaled 8.3 per cent of total loans, which is about Shs900b.
Mr Kasaija also confirmed that he talked to Sudhir Ruperelia, the vice chairman of Crane Bank before BoU made a decision to take over.
“I said to Mr Sudhir, can you bring in more money. Bring in more money so that your capital base reaches the minimum level. We also went to the level of saying: We are ready to assist you, bring in collateral to raise money but by the time he took it there, it was too late,” he added.
Bankers speak out
Support. “We wish to assure the wider public that we will continue to provide all the necessary support to our member, Crane Bank, and its various stakeholders,” UBA chairman Fabian Kasi.
The numbers
The government has confirmed that at least three prospective investors have already expressed interest in acquiring the troubled Crane Bank. Finance minister, Matia Kasaija, told a meeting organised by the Uganda Bankers Association (UBA) yesterday. Mr Kasaija said government would run the bank until the right investor is found.
“We are going to run that bank and it will survive. Once it has survived, we have already seen people who want to come in and invest some money. We already have three suitors who want to come and put in money. The bank will remain. No bank is going to be closed,” he said.
Mr Kasaija did not reveal names of people who have expressed interest in the bank. On Thursday last week, Bank of Uganda (BoU) announced it had taken over the management of Crane Bank and disbanded the board because it had been operating below the capital buffer requirement. BoU has itself been non-committal on how long it will take to find buyers. Prof. Emmanuel Tumusiime-Mutebile, the BoU governor on Thursday could not make any projections but pointed out that they will have to first complete an audit on the bank before making any decisions.
According to the Financial Institutions Act 2004, when BoU takes over a bank: “Where the financial institution does not comply with prudential standards within six months after its being placed under statutory management, the Central Bank shall close the financial institution and place it under receivership.”
BoU had not responded to questions regarding the procedure by press time. And BoU has, on several occasions, insisted that it doesn’t comment on specific business of commercial banks.
Loans to blame
Mr Kasaija also played down talk that the bank was closed over poor management. He instead notes that it was a problem of non-performing loans (NPLs) that ate into the capital base of the bank.
“If we had moved in earlier, my friend Sudhir (Ruperelia) would have said you are robbing my bank. And that would become another issue. The bank was doing well up to 2014.
I don’t know what happened in 2015 but from the figures, these people were giving me is that we begin to see bad non-performing loans so they begin to eat into bank profits. When they eat into the profit, they started eating into the capital,” he said.
He, however, criticised management for not doing enough to scrutinise who it was lending to leading to a large number of NPLs.
Estimates point out that as at June 2016, NPLs in the banking sector totaled 8.3 per cent of total loans, which is about Shs900b.
Mr Kasaija also confirmed that he talked to Sudhir Ruperelia, the vice chairman of Crane Bank before BoU made a decision to take over.
“I said to Mr Sudhir, can you bring in more money. Bring in more money so that your capital base reaches the minimum level. We also went to the level of saying: We are ready to assist you, bring in collateral to raise money but by the time he took it there, it was too late,” he added.
Bankers speak out
Support. “We wish to assure the wider public that we will continue to provide all the necessary support to our member, Crane Bank, and its various stakeholders,” UBA chairman Fabian Kasi.
The numbers
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