No explanation on Bank of Uganda’s sale of 5 banks


Bank of Uganda has failed to explain how it offered an 80% discount to buyers of five commercial banks that it closed.

According to a report compiled by the Auditor General John Muwanga, Bank of Uganda the sold assets of International Credit Bank (ICB) Ltd, Greenland Bank, Co-operative Bank, Global Trust Bank and National Bank of Commerce which were worth Shs 164billion at a discount of 80% thus fetching Shs 32 billion.

The Auditor General noted that in the case of ICB, Greenland Bank and Cooperative Bank, the total loan portfolio of Shs 135 billion included secured loans worth Shs 34.5 billion which had valid, legal or equitable mortgage on the real property but were sold to Nile River Acquisition Company at a 93% discount much as there was legal documentation to support the loans.

This came to the fore as Governor Emmanuel Tumusiime Mutebile, his deputy Louis Kasekende and other BOU senior officials appeared before Parliament’s committee on Commissions, Statutory Authorities and State Enterprises (COSASE) for the continuation of the committee’s probe into alleged irregular sale and closure of seven commercial banks between 1993 and 2016.

The probe committee in session

The probe is a result of Muwanga’s special audit report on the closure of commercial banks that he submitted to Parliament in August this year.

Before the committee, the BOU officials failed to explain the criteria they used to discount the loans and also failed to provide documentary evidence detailing the sale.

Tumubweine Twinemanzi, Executive Director in charge of Commercial Banks Supervision told the Committee that estimating the recoverable amount of a closed bank’s loan portfolio cannot be done with precision since there is uncertainty in the recoverable value of the loans, and of the costs related to recovery.

He further told the committee that no buyer of the loan portfolio for a failed bank can be willing to pay the full book value for the said portfolio, irrespective of the actual performance on the loans therein and thus, it is inevitable that loan portfolios are be sold at a discount.