Business bailout is about saving Crane Bank
KAMPALA, AUGUST18 – While most of the debate about the ongoing government bailout for distressed businesses and individuals, has revolved around the disclosed beneficiaries ,256 Business News has learned that it as much about saving a couple of commercial banks as the defaulters.
According to information available, about 24 percent of the Shs 1.3 trillion being sought in the bailout is owed to Crane Bank, a financial institution owned by one time East Africa’s richest man Sudhir Ruparelia. Sources add without a bailout for the defaulters, Crane Bank risks statutory action by financial sector regulator Bank of Uganda who requires the shareholders of any financial institution to raise additional capital to fill the hole created non-performing assets.
That would require Sudhir and company to somehow find Ushs 300 billion to recapitalize the bank that declared a Ushs 3billion loss in 2015. It is further understood that a good portion of the US$ 14 million that was recently given to Simba Group as part of the bailout was paid directly to Crane Bank. Sources add that Crane Bank which had been rolling over these liabilities for several years had exhausted the regulator’s patience and statutory action was imminent.
It will be recalled that Sudhir had been primed to join the Forbes Africa African dollar billionaires list this year but failed after significant setbacks to some of his businesses.
The other overexposed financial institution to bailout tycoons and businesses is Standard Chartered bank that has since appointed receivers to take over some these enterprises. Prominent among these is Steel Rolling Mills, a subsidiary of the Alam Group that owes the bank nearly 60 billion shillings. Others are Parambot Breweries and Pioneer Easy Bus that the bank is stuck with because there no interested bidders for its fleet of Yutong commuter buses.