Why spend Shs478b to revive Crane Bank yet it needed Shs157b capitalisation? MPs grill BoU officials

Members of Cosase during the probe. 

Bank of Uganda officials have come under fire for taking over Crane Bank that needed Shs157b capitalisation and then going ahead to spend Shs478b on running it before it was finally sold to DFCU Bank.

Members of Parliament on the Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) are conducting a probe into the closure and sale of seven commercial banks, following an Auditor General’s report that pointed at possible corruption within the central bank.

During a probe hearing on Tuesday, Central Bank officials were reading from different pages over how much undercapitalised Crane Bank was before taking the decision close it. Governor Tumusiime Mutebile admitted he didn’t have the figure while Benedict Ssekabira, the Director Financial Markets Coordination, put the figure at Shs157b.   Justine Bagyenda the former Executive Director Commerical Bank supervision said the bank required an additional capital of atleast Shs32b by September 15, 2016 and progressive capital of Shs56b if capital adequacy was to be restored by October 31, 2017.

Bagyenda and Ssekabira before the probe. 

This morning, Sekabira insisted the figure was Shs157b after COSASE Chairman asked how much Crane Bank needed to return to adequate capitalisation at the time of closure.

MP Medard Ssegonaasked for documentary evidence before Odonga Otto questioned why Shs478b was spent on a bank that needed only Shs157b at the time of closure.

“If Crane Bank was in deficit of 157b, why did you use Shs478b to clear mess?

Why didn’t BoU just capitalise Crane Bank with 157b,” MP Odonga Otto queried.

MP Abraham Byandala wondered why there was a rush to take over Crane Bank since it had been given up to end of October 2016 to recapitalise  

“A bank can even be recapitalised within a day but it was taken over 10 days before the time it was given in August 2016 MoU,” he said.

BoU spent Shs478b as liquidation support to keep running Crane Bank for three months, before it was sold to DFCU for Shs200b in January 2017.