We Don’t Have Crane Bank Assets, Loans Report: Bou Confesses Before COSASE!

We Don’t Have Crane Bank Assets, Loans Report: Bou Confesses Before COSASE!

By Andrew Irumba

Bank of Uganda officials have finally admitted that they closed and sold off Crane Bank Ltd (CBL) to dfcu in 2016 without carrying out any valuation and liabilities of its assets, contrary to the laws governing the Banking sector.

A parliamentary committee investigating the closure of seven commercial banks on Friday heard that BoU officials only relied on an inventory report, and not an assets and liabilities report, as required by the Financial Institutions Act and closed Crane bank, the biggest indigenous bank in the history banking sector in Uganda so far.

Section 95(3) of the Financial Institutions Act provides that in determining the amount of assets that is likely to be realized from a financial institution’s assets, the receiver shall evaluate the alternatives on a present value’ basis using realistic discount rate or document the evaluation and assumption on which the evaluation is based.


In compiling the assets and liabilities report, the Act also requires BoU to consider any assumptions with regard to interest rates, asset recovery rates, inflation and asset holding.

With no assets and liabilities report, BoU failed to explain how the assets and liabilities that were transferred from Crane Bank to dfcu Bank were calculated and if the method used was in line with the law.

Dr.Kasekende (R) and other BoU officials before the committee of parliament last week.

“There was no valuation as required by the law. There is a compilation of assets and when you look at this inventory, it is about a compilation of assets, it is not valuation alone. (www.almostthererescue.org) It’s all about documentation. How did you arrive at all those?” Committee chairman Abdu Katuntu asked.

In a forensic report that the Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) is relying on to conduct the inquiry, the Auditor General warned that auditors were unable to establish how the terms for the transfer of assets and liabilities in the Purchase and Assumption Agreement between dfcu Bank and BoU were determined.

“I requested for the P&A Agreement indicating the details of the assets and liabilities transferred to the purchaser (dfcu bank) to enable me assess whether Crane Bank assets and liabilities were transferred after taking into account the requisite valuation. I noted that BoU did not carry out a valuation of the assets,” the report indicates.


In defending BoU’s failure to conduct an assets and liabilities report, Mr Katimbo Mugwanya, who was the Central Bank’s statutory manager for Crane Bank, argued that BoU used what he called a “prudential method” for valuing the loans of Crane Bank.

“BoU has got a valuation method called Prudential Standard for valuing loans in all commercial banks. This valuation standard uses time-based values. If a loan is given today and the money is not used in 30 days, there is an objective way of valuing the value of that loan,” Mr Mugwanya said.

Shs200B Loan To dfcu

It also emerged that BoU advanced Shs200b loan to dfcu Bank, following its takeover of Crane Bank, but did not charge any interest on the advanced money, triggering questions over whether the deal was done in good faith.

UPDF MP Brig Francis Takirwa asked why BoU chose to inject money into dfcu Bank after the takeover of Crane Bank, but was not willing to put in money before the bank was closed.

Inquiries into the closure and sale of Crane Bank have been particularly frustrating for the Committee following the discovery that some documents were reportedly illegally taken out of BoU by Ms Justine Bagyenda, the former director for commercial banks supervision.

The investigation into the closure of seven commercial banks has hit roof tops as MPs started on inquiries into the 2016 closure of Crane Bank, a commercial bank that had been consistently given a clean bill of health by the central bank before the surprise closure.

The closed banks include; Teefe Bank (1993), International Credit Bank Ltd (1998), Greenland Bank (1999), The Co-operative Bank (1999), National Bank of Commerce (2012), Global Trust Bank (2014) and Crane Bank Ltd (CBL) that was sold to dfcu in 2016.

Accessdome.com: an accessible web community

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *