MPs reject DFCU’s report on Crane Bank

Members of Parliament’s committee on Commissions, Statutory Authorities and State Enterprise (COSASE) turned away officials from DFCU bank after they failed to present “critical documents” on the commercial bank’s takeover of Crane Bank.

DFCU bank acquired Crane Bank’s assets and liabilities following its closure by the Bank of Uganda in October 2016.

Led by the chairman of their board of directors, Jimmy Mugerwa, the DFCU team appeared before the committee that is probing Bank of Uganda’s closure of seven commercial banks shortly after former owners of Crane Bank Ltd had presented their case to the MPs.

Crane Bank’s proprietor, Sudhir Ruparelia sat in as the DFCU team defended their takeover of his bank.

“DFCU was invited, on December 9, 2016, to bid for the acquisition of all the assets and assumption of the liabilities of Crane Bank. The bid was based on due diligence findings, the Banks’ risk and our strategic objectives,” Mugerwa told the MPs.

At the time of the takeover, Mugerwa said, Crane Bank had faced significant liquidity challenges during the course of 2016 and had obtained liquidity support of more than Shs 350 billion from Bank of Uganda.

“A significant part of the deposits equivalent to Shs 441 billion was in fixed deposits (62%) at an average interest rate of 8% and 17% per annum in US dollars and Uganda Shillings respectively which was far above the market rate. The real estate portfolio comprising mainly the branch network as reflected in the fixed asset register was overvalued by over Shs 100 billion,” Mugerwa said.

Mugerwa further said that Crane Bank had non-performing loans worth about Shs 581 billion out of Shs 1.1 trillion that had been loaned out. Further still, the Rwanda subsidiary of Crane Bank was loss making and under-capitalized and required immediate capital injection to continue in operation.

However, MPs poked holes in Mugerwa’s presentation since the documents he tabled before the committee were neither dated nor signed by the bank authority. Eventually, the MPs rejected the DFCU presentation before committee chairperson Abdu Katuntu asked them to return tomorrow with more authentic documents.