The Bank of Uganda (BoU) is unable to recover the Shs 434 billion allegedly pumped into Crane Bank Ltd, before it was controversially sold to dfcu Bank in January 2017, reports PML Daily, a local online publication.
The publication writes that the Auditor General, Mr. John Muwanga, in his September 23, 2019 report raised queries on the impairment of amount due from Crane Bank Ltd (in receivership) to Bank of Uganda, pursuant to Sections 87 (3), 88 (1) (a) & (b) of the Financial Institutions Act, 2004 (amended in 2016.
The report whose findings are contained in the 2018/2019 annual report of the central bank, notes that the BoU progressed Crane Bank Ltd from Statutory Management to receivership with BoU as the receiver.
“In exercise of its powers as the receiver, under Section 95 (1) (b) of the Financial Institutions Act 2004 (amended in 2016), BoU transferred certain liabilities of Crane Bank Ltd to dfcu Bank Ltd and in consideration of that transfer of liabilities conveyed to dfcu Bank, certain Crane Bank Ltd assets,” the AG noted.
The AG’s report notes that a cash consideration of UGX. 200 billion was agreed yet Bank of Uganda had injected UGX434.846 billion into Crane Bank Ltd during the Statutory Management period as part of the intervention action and the funds were to be recovered from Crane Bank Ltd.
The AG notes that by June 30, 2019, the dfcu Bank had only paid UGX. 140 billion with an outstanding balance of UGX 60 billion for which dfcu Bank is fully secured by Government of Uganda treasury securities.
As such, the outstanding balance on Crane Bank Ltd (in receivership) is UGX258.697 billion which comprises of UGX60 billion due from dfcu Bank Limited and UGX217.906 billion due from Crane Bank Limited as at 30 June 2019 yet the amount due from dfcu Bank Limited is interest free and recoverable in the quarter ending Jan 2020.
The auditors noted that BoU performed an impairment assessment of the amount due from Crane Bank Ltd (in receivership) and concluded that the full amount outstanding of UGX 217,906 billion as at June 30, 2019 is impaired due to uncertainty of its recoverability with the AG noting, “The Bank has raised sufficient provisions for receivables whose recoverability is in doubt.”