The Bank of Uganda (BoU), the regulator of Uganda’s banking sector never took efforts to revive defunct Crane Bank Limited (CBL) after taking it over, a new report reveals.
CBL was placed under statutory management from 20th October 2016 to 20th January 2017.
“During this period, the Statutory Manager did not prepare a plan detailing efforts to return the bank into compliance with prudential standards despite BOU injecting UGX.478.8bn to support the operations of CBL,” a leaked Auditor General report on seven defunct banks reveals.
“In absence of any documented assessment to revive the bank, I could not provide assurance as to whether Sections 89(5) and 90(a)(c) of the FIA (Financial Institutions Act) 2004 was complied with,” it adds.
Section 89 (5) of FIA states that “the Central Bank shall exercise statutory management over a financial institution for the minimum time necessary to bring the financial institution into compliance with prudential standards”, while Section 90 (a) (c) of the same act talks about the duties of the statutory manager, saying “..tracing and preserving all the property and assets of the institution… evaluating the capital structure and management of the institution and recommending to the Central Bank any restructuring or re-organization which he or she considers necessary and which, subject to the provisions of any other written law, may be implemented by him or her on behalf of the institution.”
After taking over Crane Bank, BoU appointed Edward Katimbo Mugwanya as the CLB Statutory Manager.
It should be noted that in a letter dated 28th November 2017, the Parliamentary Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) requested the Auditor General, John F.S Muwanga to undertake a special audit on the closure of commercial banks by Bank of Uganda.
The seven banks in question include Teefe Bank, International Credit Bank Limited (ICBL), Greenland Bank, The Cooperative Bank, National Bank of Commerce (NBC), Global Trust Bank (GTB) and Crane Bank Limited (CBL).
The report reveals that the Statutory Manager prepared CBL annual report and financial statements for the year ended 31st December 2016, but these were neither signed by BOU nor the Auditors.
“Furthermore, the Statutory Manager did not provide financial statements for the period January 2017 to 25th January 2017 (P&A completion date). I was therefore unable to ascertain the financial performance of CBL during statutory management and its financial position as at 25th January 2017. As such, I was also unable to establish the details and values of assets and liabilities transferred to DFCU,” says the report.