dfcu officials explain valuation of crane bank assets

0
359
Dfcu officials appearing before Cosase

dfcu Bank officials for the second time appeared before Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).

The Management team was led by CEO Mathias Katamba included Juma Kisaame, William Sekabembe (Chief Commercial Officer), Agnes T. Isharaza (Chief Legal Officer), Kate Kiiza (Chief Financial Officer) and Agnes Mayanja (Chief Risk Officer).

dfcu clarified that it was not possible to obtain the copies of all the valuation reports related to the former CBL properties between Wednesday and Thursday because when transactions are carried out, the chief valuation officer doesn’t release the signed forms.

On the subject of valuation, dfcu management said valuers allotted values to each property during the process of transfer.

The valuation report by the Chief Government Valuer has become a point of interest for MPs investigating irregularities in the closure of seven banks because it clears the air on the value of the 68 Crane Bank branches that were taken over by dfcu.

The report will also shed light on Crane Bank assets that its shareholders have told the Committee that they were worth Shs1.2t in 2015, two years before it was sold.

The report will also offer clues on the disputed Shs478b that BoU claims it injected into Crane Bank to help it remain afloat.

However, the Auditor General and the former Crane Bank shareholders led by city tycoon Sudhir Ruparelia have disputed the figure.

The MPs have since asked AG to audit the expenditure.

Subsequently dfcu auditors needed to carry out a fair valuation of the same properties which called for an independent valuer.

The bank said the handover of CBL assets was done by work streams and Statutory Manager of CBL (In Receivership) Katimbo Mugwanya was involved in the process.

On the subject of Branch premises that CBL held leasehold tenures in the properties for which Meera Investments holds freehold interests, the bank said the matter is before court and can therefore not be discussed at length.

On the basis of the due diligence findings and in light of dfcu’s strategic objectives and risk appetite, dfcu’s Board of Directors gave management the go-ahead to submit a bid on the terms and conditions set out in the bid document that was dated 20 December 2016.

CBL had faced significant liquidity challenges during the course of 2016 and had obtained liquidity support from BoU in excess of UGX 350 billion.

CBL’s net asset position was negative meaning that the liabilities far exceeded the assets (UGX (589) billion as at 20 December 2016).

A significant part of the deposits equivalent to UGX 441 billion was in fixed deposits (62%) at an average interest rate of 8% and 17% per annum in USD and UGX respectively which was far above the market rate.

Yesterday the Board Chairman Mr. Jimmy Mugerwa informed the members of the Committee that dfcu Bank participated in the resolution of two banks in Uganda, namely, Global Trust Bank Limited (2014) and Crane Bank Limited (2017). In both cases, dfcu’s participation was at the invitation of Bank of Uganda (“BoU”).

Making specific reference to the purchase of CBL, Mr. Mugerwa said the bank recognised the systemic risk the closure of CBL posed to the economy of the country and so it resolved to progress with the acquisition of assets and assumptions of liabilities of CBL quickly and efficiently with minimal impact on depositors ‘…From the date when the former CBL business re-opened under dfcu, depositors were able to transact normally accessing their deposits in full…’ Mugerwa said.

There was a breach of the Financial Institutions (Foreign Exchange Business) Rules 2010 with a significant currency mismatch in the balance sheet whereby the foreign currency denominated assets far outstripped corresponding liabilities;

On the basis of the due diligence findings and in light of dfcu’s strategic objectives and risk appetite, dfcu’s Board of Directors gave management the go-ahead to submit a bid on the terms and conditions set out in the bid document that was dated 20 December 2016.

Loading...

LEAVE A REPLY

Please enter your comment!
Please enter your name here