The taking over of Crane Bank management by Bank of Uganda on Thursday afternoon has triggered shocks in the money market and sparked fury from the financial institution’s management.
A high ranking official at Crane Bank expressed shock that the Central Bank could take such a ‘radical’ action on grounds of recapitalization yet the country is entirely struggling with a liquidity crisis.
“We are in a recession; Bank of Uganda is supposed to facilitate liquidity (especially for an indigenous financial institution like Crane Bank) to strengthen but not destroy the banking sector,”
The official said that they (Crane Bank) have been fighting with BoU for the last 6 months. “Their actions are going to lead to a collapse of this economy because they don’t build investor confidence.”
BoU’s Supervision Director today said Crane Bank capital had “fallen below the 50 percent legal requirement under the law.”
On his part, Mutebile said Crane Bank was not only under-capitalised but equally posed “systemic risk to the banking sector.”
He ordered the suspension of Directors of Crane Bank as Central Bank officials marched on the financial institution’s headquarters along Kampala road.
The Central Bank went ahead to say Crane Bank had been put on the watchlist since last September following onsite tests and external audit report.
But the source said every time Crane Bank would get an investor, BoU would act in a way that does not encourage confidence.
“We have been looking for potential investors to capitalise the bank and protect customers’ deposits but Bank of Uganda made it difficult for us to succeed,” the angry official added.
During today’s press conference Governor Mutebile admitted that Crane Bank remained Uganda’s third largest bank.
The source also queried the credibility and competence of BoU managers, wondering if “those people ever run a bank anywhere.” “What are their skills? Sitting at Bank of Uganda does not give you ability to run a commercial bank,” the official wondered.
It should be noted that most University students across the country pay most of their tuition fees through Crane Bank.
