Crane Bank Crisis tips over : BoU sacks board, takes over management
KAMPALA, OCTOBER 20 – The Bank of Uganda has finally taken over management of Crane Bank as the crisis at the troubled lender tipped over.
At a hastily convened press conference two hours ago, Bank of Uganda Governor Emmanuel Tumusiime Mutebile announced the decision that had been anticipated for weeks.
“In exercise of its powers under Section 87(3), 88(1)(a) & (b) of the Financial Institutions Act 2004, Bank of Uganda has effective today, Thursday October 20, 2016, taken over the management of Crane Bank Limited.
“This action has been taken upon a determination by Bank of Uganda that Crane Bank Limited is a significantly under-capitalised institution as defined by law, poses a systemic risk to the stability of the financial system and that the continuation of Crane Bank’s activities in its current form is detrimental to the interests of its depositors,” Mutebile said.
He explained further that Bank of Uganda had appointed a statutory manager for Crane Bank and suspended the lenders Board of Directors.
However, the lender will remain open and its operations will continue normally, but under the management and control of the central bank.
The development effectively means the lender’s search for a strategic partner did not progress beyond a dispute over the banks true worth.
Crane Bank began suffering a run on deposits as it became clear that the institution was undercapitalized and prospects of raising new capital were dim. The panic was triggered by a letter the bank wrote to its major creditors recalling the loans.
It was not immediately clear if the bank of Uganda was now taking over the search for new owners and what the fate of existing shareholders, including White Sapphire, believed to be a Trojan for local political interest would be.