Deepak Malik, the Chief Executive Officer of Arise Holdings Ltd, the biggest shareholder of struggling DFCU Bank gave no reason for quitting as director (and board member) of DFCU Limited and DFCU Bank Limited, it has emerged.
In a letter written to Mr. Elly Karuhanga and Mr. Jimmy Mugerwa, respective chairpersons of DFCU Limited and DFCU Bank Limited, jotted on July 5, 2018, Deepak tendered in his resignation notice with 'great sadness' but gave no reason for a bank he served since 2004.
He indicated then, when he wrote the resignation letter, that his board engagements would end on 21st, September, 2018. He however availed himself 'as an adviser to the respective chairpersons of DFCU Limited and DFCU Bank Limited'.
News of Deepak’s departure came at a time DFCU’s second biggest and longest investor, Commonwealth Development Corporation (CDC), had announced it was putting an end to their relationship with the commercial bank it set up with government of Uganda in 1964.
CDC’s Investment Director in charge of Financial Institutions, Irina Grigorenko, said in a communication to DFCU 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.”
Subsequently, news indicating that Arise, DFCU’s biggest shareholder, with a 58.71% ownership, was also leaving surfaced. The bank was quick to refute those claims through a press statement and Arise stayed but not Deepak. The actions of CDC and Arise BV threatened the smooth running of the commercial bank.
DFCU is believed by industry observers to be the second biggest commercial bank in Uganda after they bought Crane Bank from Bank of Uganda under terms scantly explained to the public.
Many industry experts speculated that Deepak’s departure was in preparation for Arise’s final DFCU exit. Actions of Arise and Deepak have somehow destabilized DFCU and sent shivers among shareholders, the public and the financial sector.
Just before the public got used to news that two top investors at DFCU 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.
This under liquidation talk have persisted and continue to portray the bank as one that is struggling and might need a bail out. News emerged this week indicating that the bank management is engaging government for a possible bail out.
Current Shareholders of DFCU
- Arise BV 58.71%
- CDC Group of the United Kingdom 9.97%
- National Social Security Fund (Uganda) 7.69%
- Kimberlite Frontier Africa Naster Fund 6.15%
- 2 undisclosed Institutional Investors 3.22%
- SSB-Conrad N. Hilton Foundation 0.98%
- Vanderbilt University 0.87%
- Blakeney Management 0.63%
- Bank of Uganda Staff Retirement Benefits Scheme 0.59%
- Retail investors 11.19%