Uganda's central bank takes control of Crane Bank

Thursday October 20 2016

Uganda’s central bank has taken over management of Crane Bank due to a financial crisis that has left the lender without adequate capital. PHOTO | MORGAN MBABAZI

Uganda’s central bank has taken over management of Crane Bank due to a financial crisis that has left the lender without adequate capital. PHOTO | MORGAN MBABAZI | NATION MEDIA GROUP

By Bernard Busuulwa

Uganda’s central bank has taken over management of Crane Bank due to a financial crisis that has left the lender without adequate capital.

The Bank of Uganda (BoU) governor Emmanuel Tumusiime Mutebile, at a Press briefing in Kampala on Thursday, said the bank will however remain open and operational.

The board of Uganda’s third largest bank has also been suspended and Edward Katimbo Mugwanya appointed as its statutory manager.

“This action has been taken upon the determination by the Bank of Uganda that Crane Bank, significantly under-capitalised, poses a systemic risk to the stability of the financial system.

“The continuation of Crane Bank’s activities in its current form is detrimental to the interests of its depositors,” Prof Mutebile said.

In a message to Crane Bank’s employees in its 46 branches in the country, Prof Mutebile assured them that they would retain their jobs under the management of the regulator. The bank has about 500,000 customers.

Barely a week ago, Crane Bank was reported to have been in talks with former Barclays Plc chief executive Bob Diamond’s Atlas Mara Group to acquire a strategic stake.

Troubles for the local lender came to the fore about a month ago when it was revealed the bank was looking for a “strategic equity investor”. Then, its majority shareholder, businessman Sudhir Ruparelia tried to ward-off talk the bank was in trouble.

The wealthy Ruparelia’s family holds a 48 per cent stake, of which 28 per cent is individually owned by the businessman, with another 48 per cent share held by investment firm White Sapphire. The ownership of White Sapphire is however unknown.

Though Crane Bank has steadily posted impressive financial results since it began operations in 1995, a surge in default rates from trade financing and small and medium-sized enterprises (SMEs) segments eroded its earnings, resulting in a net loss of Ush3 billion ($872,068) in 2015 - its worst performance yet.

Its bad loans alone accounted for a fifth of the sector’s bad assets.

Industry sources claim Crane Bank’s non-performing loans ratio hit double digits during the first half of this year.

Crane Bank also has a branch in Kigali, Rwanda.

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