Crane bank violated Financial Institutions Act, says dfcu

0
290
dfcu officials appearing before Cosase

dfcu bank says at least half of Crane Bank’s loans were non-performing by the time the bank was taken over.

Jimmy Mugerwa, the bank chairman, told Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) that it was Bank of Uganda that invited dfcu to bill for the assets.

MPs investigating irregularities in the closure of banks had discovered a number of non-performing assets, questionable loan approvals, poor credit administration and collateral that was given out with no evaluation of assets.

According to Mugerwa, all efforts were made to protect the interests of the depositors.

At least 600,000 depositors acquired from Crane Bank continue to operate although Crane Financial Services chairman has refused to yield to dfcu’s request to execute the necessary documentation.

The dfcu team also presented documents which show that Crane Bank had poor credit monitoring standards.

The documents highlight the unclear relationship management model, lack of call reports and no proactive project management.

Mugerwa said Crane Bank concentrated mainly in high risk products in violation of the Financial Institutions Act.

William Ssekabembe, a dfcu Bank executive director, told MPs they have met Katimbo Mugwanya, a statutory manager that had been appointed by Bank of Uganda to handle the takeover.

In exercise of its powers under Section 87(3), 88(1)(a) & (b) of the Financial Institutions Act 2004, Bank of Uganda effective October 20, 2016, took over the management of Crane Bank Limited.

This action was upon a determination by Bank of Uganda that Crane Bank Limited was a significantly undercapitalised institution as defined by law, posed a systemic risk to the stability of the financial system and that the continuation of Crane Bank’s activities in its current form is detrimental to the interests of its depositors.

 

Loading...

LEAVE A REPLY

Please enter your comment!
Please enter your name here