Crane Bank limited demands Shs 570 billion compensation from Bank of Uganda

Shareholders of the now defunct Crane Bank Limited have placed before Parliament a demand to be compensated with more than Shs 570 billion by Bank of Uganda for the losses they have suffered since their bank was summarily closed in October 2016.

Appearing before Parliament’s committee on Commissions, Statutory Authorities and State Enterprises (COSASE) the shareholders led by property mogul Sudhir Ruparelia claimed that their ban was illegally closed, and accused the central bank of having had a predetermined plan to asset strip Crane Bank and sell it to the preferred buyer.

Three months after the bank was closed, the central bank sold it DFCU bank at an interest free loan of 200bn shillings while BOU rejected the Crane Bank Limited’s request for the same loan facility.

Crane Bank’s former chairman of board of directors Joseph Biribonwa accused Bank of Uganda of not doing enough to save Crane Bank from the financial challenges the bank was going through but rather chose to have it taken over.

Biribonwa admitted that indeed Crane Bank was undercapitalized but as shareholders, they had taken relevant steps to resolve the matter their efforts frustrated by Bank of Uganda.

The liquidity crisis at the bank, Biribonwa said, had been caused by the 2014/15 economic downturn which they had hoped to solve through a four prolonged approach which included more aggressive debt recovery, enhanced search for equity partners coming in, Interbank borrowing and borrowing from BOU.

Sudhri Ruparelia (c) with his lawyers during interface with COSASE

The chairman of Ruparelia Group of companies who was also vice chairman of the bank Ruparelia says that the shareholders of the bank want the return of the bad loan book that was handed to DFCU.

He thus requested that the committee prevail over BOU and cause for a compensation given the manner in which the closure was handled.

A session of Committee on Commissions, Statutory Authorities and State Enterprises as at Feb 6 2019

He has also called for a market valuation of the assets and liabilities that were sold to DFCU since to date no one knows the list and values of the assets and liabilities sold to DFCU.

Ruparelia also wants Bank of Uganda return $23.5 million the Crane Bank shareholders deposited with Bank of Uganda since the purpose for which the money was advanced to Bank of Uganda was not met, and therefore Bank of Uganda has no reason to keep it.