Before the dust raised by Bank of Uganda when it took over the management of Crane Bank for being undercapitalized, news that more banks will suffer the same fate emerged. The banks that were rumored to be clamped down include Cairo Bank, DFCU, Centenary, ABC Bank, Bank of Africa, Diamond Trust Bank and Eco Bank. Bank of Uganda has not come out to clarify on the rumor.
Bank of Uganda took over the management of Crane Bank last week days after defending the Ruparelia owned bank. The move caused a lot of uncertainty and debate in the public domain. Bank customers in the sector panicked fearing that they would lose their deposits. The move did not go down well with Crane Bank owners who described the decision by Bank of Uganda as malice. They say they were looking for an equity investor and the central was aware.
Bank of Uganda’s silence on the state of Cairo Bank, DFCU, Centenary, ABC Bank, United Bank of Africa, Bank of Africa, Diamond Trust Bank and Eco Bank majorly owned by foreign investors has been received with mixed feelings by some sections of the public.
They wonder why the central bank rushed to takeover Crane Bank, an indigenous bank, while foreign banks are equally struggling. Some banks, especially those owned by Nigerians are said to be not making even. They are reportedly making no money at all yet Bank of Uganda looks the other side.
Alfred Owino, a retired banker says that if Bank of Uganda wants a functioning banking sector, all banks that are undercapitalized must be dealt with in a manner that brings sanity in the sector. “It shouldn’t be selective action. International banks repatriate profits yet local banks like Crane Bank invest in the country.” Owino stated in an interview.
Christine Alupo, Director Communications at Bank of Uganda issued a statement on Monday saying the financial Sector is Stable, Sound and Resilient. She encouraged the public to continue conducting their banking business without panic.
But news that Cairo owned by Egyptians and United Bank of Africa owned by Nigerians are undercapitalized and face closure contradicts Bank of Uganda message. As long as such rumours continue to emerge the banking sector will face panic and further insecurity.
“Government of Uganda should be supporting local businesses. Bank of Uganda should be even more keen on foreign banks because at the end of the day, if the fail, they will pack up their banks and return wherever they came from and people will have lost their money. Bank of Uganda should go for them too.” Henry Isabirye, an economics tutor, said.
The Ugandan economy has been not faring well and to many pundits the strife affecting the banking sector doesn’t come as a surprise. High cost of credit has kept away borrowers. Those who borrowed are failing to pay back the loans. People don’t have money to save with banks. You cannot also rule out the impact caused by mobile money. People now prefer to save on their phones than go to the banking halls.