Did BoU deliberately over-estimate Crane Bank’s problems, choke it of any help and finally under-value its assets so as to hurriedly sell it off, for a fraction of its worth, for the benefit of a few individuals?
These are questions you can’t help ask yourself when you analyse both the contract and the manner in which BoU sold Crane Bank. For example, why did the central bank secretly bequeath UGX600 billion in so-called Crane Bank bad loans to Dfcu, yet Crane Bank shareholders had already been made to pay for them?
How could a dangerously-in-red Crane Bank assist Dfcu to grow its half-year profits by 396% in just 5 months of acquiring Crane Bank? How come Crane Bank assets appreciated more than 3 times in value on crossing over to Dfcu; did someone deliberately undervalue them so as to benefit Dfcu?
We have all been told that Crane Bank was a very toxic bank whose bad debts had eaten into their core capital and were therefore insolvent, thus justifying its takeover by the central bank in October 2016 and subsequent sale to Dfcu in January 2017.
In technical terms, Bank of Uganda told us — and we believed — that “Crane Bank’s Core and Total Capital was eroded to below the minimum on-going Capital Adequacy ratios of 8% and 12%, effectively making Crane Bank undercapitalized.
