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BoU Boss: Crane Bank Sale To Dfcu Was A Blessing

Crane Bank

By Aloysious Kasoma

The controversial successful sale of Crane Bank to dfcu was a blessing to the financial sector, Dr. Louis Kasekende, the Deputy Governor,  Bank of

Uganda has said.

Speaking at an event to mark 20 years of Securities Exchange (USE) at Kampala Serena Hotel on Friday Kasekende said: “We were dealing with an insolvent bank. BoU did not sell to dfcu because there was no body, instead the bank carried out the purchase and dfcu assumed most of the assets and liabilities equivalent to the value.’’

He added that some assets and liabilities remain with the liquidator.

Kasekende applauded the transaction and said that the regulator was still in control of the banking sector, adding that BoU takeover of Crane Bank was carried out in accordance with the law and regulations of the Central Bank.

He said the act was on point to avoid other banks being affected by the spillover effects of speculation.

“The regulator achieved three pillars which were most important to date.

No Crane bank depositor lost money and time; there was no contention from the rest of the banks in the system,” he added.

Kasekende added that the public funds used by  BoU to keep Crane Bank liquid before its resolution will only be fully recovered when owners of Crane Bank pay back the insider loans that they took out of the bank .

“The claim that there was something suspicious or scandalous about the resolution of Crane Bank portrays a lack of understanding both about the financial realities of banking and of the means through which failed banks are resolved by bank regulators,” Kasekende, adding that when Crane Bank was resolved by BoU, the value of assets was much less than the value of its liabilities.

“Consequently, Crane Bank had a negative net worth of approximately Shs260bn,” he added.

After controversially taking over Crane Bank, dfcu’s net profit hit Shs127bn in 2017, up from 46bn registered in 2016.

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