PARLIAMENT – Bank of Uganda officials on Tuesday failed to explain how they arrived at Shs297 billion figure of under capitalisation that led to its statutory takeover of Crane Bank thus prompting the chairperson of the Parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) to adjourn the probe to Wednesday.
Governor Emmanuel Tumusiine-Mutebile Tuesday told MPs investigating the disputed closure of banks that he does not have figures on Crane Bank’s undercapitalisation, triggering furious rebuttals over why the Central Bank concluded that Crane Bank was in an untenable financial situation and the only option was to close it without definitive figures on its books of accounts.
“I don’t have a figure for its undercapitalisation but I know what we demanded to put in place,” the Governor told MPs.
Mr Mutebile’s position that he did not have figures regarding Crane Bank’s undercapitalisation was contradicted by Mr Benedict Ssekabira, the Director Financial Markets Coordination, who said Crane Bank required further injection of Shs157b for it to remain afloat.
“Capital is a moving target. It is ongoing target-moving all the day so you must know at what time you have measured. You can give a number today and a different number tomorrow,” Mr Ssekabira said as he defended fluctuating figures.
On the other hand, Ms Justine Bagyenda, who was the director of commercial banks supervision when Crane Bank was closed, indicated that the bank required an additional capital of at least Shs32b by September 15, 2016 and progressive capital of Shs56b if capital adequacy was to be restored by October 31, 2017.
Crane Bank was closed on October 20, 2016 and dfcu took it over in January 2017.
“On July 1, 2016, BoU instructed Crane Bank to inject additional capital of at least Shs32b by September 15, 2016 to rectify the significantly undercapitalised [reserves] and to progressively inject capital of at least Shs56b in order to restore the bank to capital adequacy by October 31, 2017,”Ms Bagyenda said.
Queries over how much money was injected in Crane Bank by the government will, however, remain as it had emerged in 2016 that the government had used Shs200 billion worth of taxpayers’ money in unsuccessful attempts to prevent the bank from collapsing.
Mr Katimbo Mugwanya, a former director at BoU who was appointed Statutory Manager for the sale of Crane Bank, admitted that he had bungled up the calculations on how the money that was injected in Crane Bank was calculated.
