CDC’s pulling out of DFCU is a sign of a crumbling bank.
By Kagenyi Luka
Apparently, all is not rosy at dfcu bank as its second majority shareholder has hinted on a possibility of cutting ties with the commercial bank raising concerns as to whether the crane bank ghost is at work.
CDC Group, a UK-based development finance institution which owns 9.97% of dfcu is reported to be on the verge of pulling out its shareholding from dfcu bank which controversially “bought” crane bank in 2017 at a paltry credit of Uganda shillings 200 billion.
It is reported that CDC wrote the dfcu board on 14th June clearly stating its intention to sale its stake sending panic waves at the bank.
And accordingly, CDC’s Investment Director in charge of Financial Institutions, Irina Grigorenko, said it was “undertaking a review of its investment in DFCU Limited which may lead to the disposal of some or all of its shares in DFCU over a short or medium term.”
Reliable sources indicate that CDC’s decision may have been triggered off by the reckless acquisition of crane bank. This has turned out to be a costly, and mind boggling venture.
Earlier reports indicated that CDC was so much uncomfortable with way dfcu’s management led by Julius Kisaame took over assets of crane bank limited.
In particular, DC expressed concerns of incompetence, unprofessionalism and failure to conduct due diligence in the whole process of buying crane bank seizing ownership of the 48 former crane bank branches.
The transfer of these branches to dfcu was vehemently protested by former cbl majority shareholder, Dr Sudhir Ruparellia who went to court challenging the takeover of these properties which belonged to Meera Investments Limited.While the case is yet to be disposed, it exposed the management of dfcu.
A ruling in favor of Dr Sudhir’s favor will most likely send instability into the banking activities of dfcu bank whose activities were buoyed by the alleged buying of crane bank.
Further still, of timely concern to CDC was the contested sales agreement which was entered between the buyer(dfcu) and the seller(BoU).This sales agreement has been vilified by shareholders as being unfair having not taken into consideration the interests of former crane bank shareholders.
It is also widely perceived to have been the dirty handwork of elites in Bank of Uganda, well known Mafioso in the legal fraternity and dfcu officials.
This leaked agreement between Bank of Uganda and DFCU indicated that the nonindigenous Bank got Crane Bank with assets valued at Shs1.3 trillion for just Shs200 billion.
The Agreement did not state the amounts of money paid by DFCU as a net purchase price, or the payment terms for monies or the assets (outside
branches) that DFCU was taking over.
The upshot of this agreement was the petition to parliament by shareholders which sparked off a forensic audit into the sale commercial banks with specific attention to the crane bank case.
All the above cases couldn’t let a reputable shareholder be at the face of endless controversy.
CDC’s pulling out is thus a sign of a crumbling bank as it points to many underlying currents at the institution.
Other reputable companies may not consider buying shares into the bank while some can opt
out as well because there is no assurance and reassurance that those at the helm can act better than in the crane bank case.
Kagenyi Lukka is a current affairs analyst and
the next MP,Ikiiki county.