KAMPALA, Uganda—Bank of Uganda (BoU) the regulator of Uganda’s financial sector has said Uganda’s financial sector is stable amid fears by the public that a crisis is looming in the sector following the takeover of Crane Bank the largest indigenous bank in the country by BoU.
“Uganda’s financial sector is stable, sound, and profitable,” the Governor, BoU, Emmanuel Tumusiime-Mutebile said.
Mutebile was responding to questions by the media about the speculation making rounds that BoU had put two more other Banks under its close watch just a few days after it took over the management of Crane Bank, which the media thought signalled a forthcoming crisis in the financial sector.
Mutebile said BoU took over the management of Crane Bank under its statutory mandate to protect the deposits of Customers.
He said under this statutory obligation, they are mandated to manage the Bank for six months within which they supposed to find new shareholders whom BoU will then hand the management of the Bank going forward.
“We have done this before and I don’t think in the next six months, we shall fail to find new shareholders to run Crane Bank. So there’s no cause of alarm because merges and takeovers of banks happen in different parts of the world,” Mutebile said.
In press statement issued last week, BoU stated that In exercise of its powers under Section 87(3), 88(1)(a) & (b) of the Financial Institutions Act 2004, Bank of Uganda effective, Thursday October 20, 2016, took over the management of Crane Bank Limited.
BoU said this action had been taken upon a determination by Bank of Uganda that Crane Bank Limited was significantly a undercapitalised institution as defined by law, which posed a systemic risk to the stability of the financial system and that the continuation of Crane Bank’s activities in its current form was detrimental to the interests of its depositors.
Accordingly, Bank of Uganda appointed a statutory manager of the affairs of Crane Bank Limited and suspended the Board of Directors of this particular bank.
BoU assured the public that Crane Bank Limited would remain open and its operations will continue normally, but under the management and control of BoU.
Bank of Uganda further reassured the public that it will continue to protect depositors’ interests and maintain the stability of the financial sector.
The Minister of Finance, Planning and Economic Development, Matia Kasaija said as managers of the country’s economy, it is incumbent upon them to ensure that all sectors that fall in their docket operate under statutory requirement while protecting the interest of the public.
“By the way, Bank of Uganda has a keen watchful eye on all the financial institutions in this country and immediately we reorganize any anomaly, we come in immediately. That is why we must congratulate BoU for this,” Kasaija said.
In recent years, a number of commercial Banks have closed door to the Ugandan Market after Bank of Uganda took over their management for similar reasons only to reopen with a different brand name following acquisition by new shareholders.