At least six financial institutions, among them two Ugandan entities, are clamouring to buy Crane Bank whose management the Bank of Uganda took over in October, this year, over under-capitalisation.
The sale arrangement, which highly-placed sources said is in advanced stages, comes in the wake of a case former prime minister Amama Mbabazi filed in court to block the transaction.
Highly-placed sources, who spoke on condition of anonymity due to the sensitivity of the matter, intimated that representatives of the prospective buyers have over the weeks held back-to-back meetings with central bank and Finance ministry officials.
The bidders include Development Finance Company of Uganda (dfcu) Bank, Barclays Africa, First National Bank of South Africa, Aethel Partners, and General Equity, a New Zealand-based fund. We were unable to establish the identity of the sixth prospective buyer.
The bidding banks are all African-owned except Aethel Partners, an investment and advisory vehicle that owns European Bank-Banco Efisa, a European bank they acquired in 2015.
A source familiar with the ongoing conversation said all the prospective buyers were required to sign a Non-Disclosure Agreements (NDA), to formally bind and bar them from divulging any detail of the negotiations.
This newspaper understands that New Zealand’s General Equity has not yet signed an NDA, a prerequisite to advance to the next stage in the negotiations.
The planned sale is to get a strategic investor to recapitalise Crane Bank in which businessman Sudhir Ruparelia and family jointly own majority shares.
We were unable to reach Mr Ruparelia over the impending transaction in his bank.
Finance minister Matia Kasaija confirmed that they had invited and are holding talks with a number of potential investors, including the latest meeting they had last Wednesday.
“There is no problem. [If] anybody comes with the money to put in to capitalise that bank, and they give us their credentials and we find that they have the capacity to run the bank, then we shall welcome them. It can be a foreign based bank or local bank,” he said.
He referred subsequent inquiries to Bank of Uganda (BoU).
Neither Ms Justine Bagyenda, the central bank’s executive director of supervision, nor the acting director for communications, Mr Kelvin Kizito Kiyingi, was willing to discuss the imminent sale of Crane Bank.
It is unclear what criteria the government is using to sell off the bank and Mr Mbabazi’s lawyer Saverino Twinobusingye said, without providing specifics, that the transaction would be “contempt of court”.
The ex-premier and other influential government officials, including BoU Governor Emmanuel Tumusiime -Mutebile and current Prime Minister Ruhakana Rugunda, were majority shareholders in the defunct National Bank of Commerce (NBC) which the central bank seized in 2012 and sold to Crane Bank --- which it has now placed on the market.
The NBC shareholders at the time in a yet-to-be-resolved petition, challenged the seizure and sale of their financial institution to Crane Bank, which was then expedited on the same day.