KAMPALA – Bank of Uganda (BoU) Director for supervision Tumubweine Twinemanzi is on Monday afternoon expected to hold a crisis meeting with the management of DFCU Bank in a bid to determine the latter’s financial position as two of its shareholders pull out of the bank.
Last week, this website reported that the Commonwealth Development Corporation (CDC), Britain’s oldest development finance institution has elected to opt out of its investment arrangement in DFCU bank.
The Chief Executive Officer of Arise Holdings Ltd, which is DFCU Bank’s biggest shareholder, also resigned from the bank’s board of directors, throwing the future of the financial institution into more turmoil following its controversial takeover of Crane Bank.
And now sources at the bank have told this website that BoU wants to seek assurance of the bank’s liquidity position following allegations that it is struggling to raise credit cash as CDC and of Arise Holdings Ltd move to pull out their investment.
The bank’s troubles stem from the controversial acquisition of Crane Bank, the then 4th largest bank on February 27, 2017 at a fee later to be discovered as a paltry Shs200 billion. Following the takeover in January 2017, DFCU Bank at the end of December announced net profit of Shs127.6 billion, Shs81 billion higher than what it recorded at end of December 2016.
The top shareholders in the bank are also reportedly fighting over the profits made in 2017, with Arise B.V. which only came in February 2017, set to take most of the profits.
DFCU’s troubles have been precipitated by the bank’s controversial acquisition of Crane Bank Ltd. It is said that after Crane Bank Ltd shareholders protested the takeover of branches by DFCU, it unsettled the board after CBL insisted that branches weren’t part of the bank as they fall under Meera Investments Ltd . CDC and two other partners opposed the deal and accused DFCU bosses especially the Managing Director Mr. Juma Kisaame for not carrying out enough due diligence. The British investor has now acted. DFCU has in recent months been battling former Crane Bank shareholders over property worth millions of dollars.
Former Crane Bank shareholders led by majority shareholder Sudhir Ruparelia and family have dragged the Bank of Uganda (BoU) to court, claiming their bank was sold to DFCU without considering their interests in accordance with the Financial Institutions Act.