Although they are yet to receive a copy of the detailed judgement in which Diamond Trust Bank Uganda, alongside Diamond Trust Kenya, were ordered to pay business man Ham Kiggundu UGX120 billion and an additional interest of UGX9.6 billion, the Uganda Bankers’ Association has released a statement saying they intend to join DTB as an interested party in its appeal at the High Court to determine the case on its merits.
The Association is also concerned about the impact of the ruling on the entire banking industry saying that it has sent shockwaves across the industry and stakeholders.
The statement by Chairman Mathias Katamba and Executive Director Wilbrod Owor reads as follows:
Uganda Bankers’ Association has learnt of the judgement delivered yesterday 7th October 2020 in the High Court of Uganda (Commercial Division) arising from an interlocutory application in H.C.C.S No.43 of 2020 involving one of our members, Diamond Trust Bank (U) Ltd and related parties.
Although the Association is yet to receive a copy of the detailed judgment, the ramifications of the judgement has sent shockwaves across the entire industry and related stakeholders premised on the following five areas of assessment;
- As a result of the judgement and its implications & its implications, the syndicated portfolio currently seated with commercial banks that is now at risk is over UGX5.7 trillion (US$1.53 billion) of running facilities across various sectors including real estate, road construction, energy covering hydro electric power, oil & gas and manufacturing, among others. The above figure does not include pipeline transactions that will still be processed or undrawn yet all that have been halted since judgement came out yesterday.
- The above figures exclude syndicated lending to Government of Uganda who is the largest beneficiary of syndicated lending for various development programmes in the country.
- The wide sweeping nature and sheer weight of the shockwaves the judgment has sent to our international partner agencies and lenders and the implications for the country as an investment destination.
- The message this judgement is sending to other borrowers with foul intention who can now anchor their default on this judgement that declared syndication illegal
- The overall impact of the judgement to the economy
The Chief Executives of the 35 members of the Uganda Bankers’ Association that includes all the Tier I Commercial Banks, the Development Banks and Tier II & III (Micro Finance and Deposit taking Institutions), supervised by Bank of Uganda, have this morning resolved as follows:
- To join Diamond Trust Bank (U) Ltd as an interested party in its appeal at the higher court to determine the case on its merits.
- To join Diamond Trust Bank (Uganda Limited) to file for a stay of the execution of the orders of Hon Justice as ruled yesterday
- To call upon the Central Bank of Uganda to pronounce itself on this matter
- To call upon the executive arm of Uganda Government through the Minister of Finance, Planning and Economic Development and the Attorney General to pronounce themselves on this matter, more so because they are the accountable officers for syndicated facilities contracted by Government including where foreign counterparts are involved and re-assure the financial sector, international lending partners and the entire country of the commitment to continue honouring all debt obligations in line with the agreed protocols.
- To call upon our esteemed good borrowers and all customers to remain calm as appropriate action is undertaken to address the challenges arising from this specific judgement.
- To call upon our friends and stakeholders including Uganda Insurers’ Association, PSFU, UMA, KACITA, Telecom Sector Players, ULS, Members of Parliament, Civil Society, Uganda Investment Authority, Capital Markets Authority, Financial Intelligence Authority, Uganda Revenue Authority, Professional Bodies among others as well as the Judiciary itself to join us in addressing the implications of this judgement and assist in avoiding the adverse effects this judgement could lead the country and the economy into.