Emmanuel Tumusiime – Mutebile, Governor Bank of Uganda, has dismissed as untrue reports saying he blew Shss478b in the Crane Bank takeover.
Mutebile who was responding to a story published by Daily Monitor explained that the money was a loan extended to save struggling Crane Bank.
In a statement, Mutebile said like any other Central Bank, [BOU] can create financial assets and liabilities.
“In this case, the BoU created a financial asset (the loan to Crane Bank), which was matched by an equivalent liability.”
He added: ““In fact, the vast majority of this money – Shs466 billion – actually was liquidity support. Crane Bank had been losing liquidity for months prior to its takeover by BoU.”
He said this was because a large share of its loan portfolio was not being serviced by the borrowers and because customers were losing confidence in the bank and withdrawing their deposits.
Mutebile said BoU also spent Shs12 billion in resolving Crane Bank and that the expenses were necessary to ensure that the bank’s assets and liabilities could be transferred to another bank.
He said the central bank recovered Shs200 billion of the loan through the sale of assets and purchase of assumption transaction.