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dfcu Find Themselves In Unenviable Situation

Crane Bank takeover by dfcu is becoming a big problem Crane Bank takeover by dfcu is becoming a big problem

Just before the public got used to news that two top investors at dfcu bank could be leaving, reports of a liquidity crisis hitting them surfaced indicating that the commercial bank failed to secure loans from Bank of Uganda after hitting inter bank borrowing limit

It was reported that managing director Juma Kisami and the board of directors went to the central bank for a crisis meeting. Apparently dfcu requested the central bank to put a lien on the treasury bills and help them borrow money to enable them run business.  

“Unfortunately, they told us that they cannot allow us because we are already over exposed in the market. I tell you we have huge liquidity crisis,” an unnamed dfcu official was quoted by the media.

The interbank lending is a process in which banks extend loans to one another for a specified term. These loans are for maturities of one week or less. Matters at dfcu were not made any better by the resignation of Executive Director William Sekabembe.

Daily inspector, a local news website said Sekabembe’s resignation came as a result of dfcu’s failure to have a clear vision to move the banking sector to the next level. Sekabembe has reported got a new job at KCB Bank.

Another notable resignation at dfcu is that Arise BV Chief Executive Officer Deepak Malik who resigned from the dfcu board. Arise BV are the biggest shareholders in dfcu with almost 60 percent stake.

Troubles hit tipping point when the second biggest investors in dfcu, the CDC Group was quitting dfcu because of related corporate governance issues. Elly Karuhanga, the board chair of dfcu bank confirmed that CDC was leaving.

It is highly believed that CDC after realizing that the bank was headed for hard times and being threatened by court cases because of their involvement in the take over of Crane Bank, decided to exit dfcu.

CDC’s Investment Director in charge of Financial Institutions, Irina Grigorenko, said it was “undertaking a review of its investment in DFCU Limited which may lead to the disposal or some of some or all of its shares in DFCU over the short to medium term.”

Other report are indicating that CDC was against the idea of dfcu acquiring Crane Bank because of the flaws and illegalities surrounding its sell and takeover by the Central Bank of Uganda.

“CDC gave good advice to DFCU bank management saying it would still make profits like before without purchasing another bank but these guys went ahead with the deal and instead purchased problems,” a source at CDC is quoted.

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