UCB On Sale Again

By Richard Mutumba THE Uganda Commercial Bank (UCB) is up for sale again, Bank of Uganda Governor Emmanuel Tumusiime Mutebile said yesterday. Mutebile said 11 renowned international banks had been short-listed as possible buyers of the bank, which had earlier been sold to Malaysian investors, Westmont Land Asia. Mutebile and the Minister in-charge of Privatisation, Manzi Tumubweine, were appearing before the parliamentary committee on the national economy at Parliamentary Buildings. Uganda won back its 49% shareholding in UCBL from Westmont in a decision made in London last November by arbiter Stewart Boyd QC. UCBL's shareholding was under contest because Westmont flouted a privatisation agreement and transferred its 49% shares illegally to the now defunct Greenland Bank. The Government had also accused Westmont of violating the 1997 management contract by entering into a secret agreement with Greenland Bank. "When a bank is mismanaged and we intervene, we cannot return it to its former shareholders. Government has agreed that Bank of Uganda should sell UCB under the Financial Institutions Statute," Mutebile told the committee chaired by Isaac Musumba (Buzaya). He said if banks were to be returned to shareholders, it would set a bad precedent where people would buy financial institutions and enrich themselves at the expense of the depositors, with the hope that the Central Bank would intervene. Mutebile said UCB had been salvaged and made profitable, although it was still insolvent. He said the bank was short of capital to the tune of between sh3b and sh6b, adding that its income was not from a sustainable source. Mutebile said the bank's interest income was still negligible. "My deputy and a consultant will soon dispatch letters to the intending buyers in order to test the market and establish the terms and conditions of sale after which a decision will be taken," he said. But Mutebile added that it was not yet possible to say what proportion of the bank would be sold. He said some shares would be held in trust to be sold to the public. The MPs expressed concern that the process might not be transparent since the Privatisation Unit had been moved out of the deal and because the Central Bank operated independently. The committee demanded Tumubweine avails Parliament within a month, a written status report of UCBL's current position. Ends