Chairman DFCU Group – Crane bank was broke at closure

Jimmy Mugerwa, the chairman of DFCU Group has spoken out on the closure of Crane Bank saying it had capitalization deficiencies at the time of closure.

Although Crane Bank managers had earlier testified before the committee of parliament on Commissions Statutory Authorities and State Enterprises stating that they had several measures in place to support their bank, DFCU, the ultimate buyer of the defunct bank has refuted the claims.

According to Mugerwa, Crane Banks’s real estate portfolio comprising mainly the branch network as reflected in the fixed asset register was overvalued by over UGX 100 billion.

He also says that a significant part of the deposits equivalent to UGX 441 billion was in fixed deposits valued at an average interest rate of eight percent and 17 percent per annum in US Dollars and Uganda shillings respectively, which rates were far above the market rate.

He has further highlighted a breach of the Financial Institutions rules relating Foreign Exchange Business reflected in a currency mismatch in the balance sheet whereby the foreign currency denominated assets far outstripped corresponding liabilities.

At the same time, Mugerwa says Crane Bank Rwanda was only making losses in addition to being under-capitalized and that it required immediate capital injection to continue in operation.