Mps, A Bank Is Not Sold Like A Cow!

Mar 05, 2003

SIR — I would like to appeal to the Members of Parliament (MPs) to show some sense of patriotism and seriousness when debating important issues like the sale of Uganda Commercial Bank Ltd (UCBL).

SIR — I would like to appeal to the Members of Parliament (MPs) to show some sense of patriotism and seriousness when debating important issues like the sale of Uganda Commercial Bank Ltd (UCBL). Alarming statements like “donation to political vultures” do not help matters but may damage the credibility of the people issuing such statements in the eyes of those in the know. A bank is not sold like a cow, that is, to the highest bidder. Even under normal tendering procedures, there is always a process of evaluation after opening of bids, otherwise tenders would be awarded on the day the bids are opened. There are many important issues to consider when selling a bank. in my view, price should not be among them. The credibility, financial strength and banking record of the bidding institution should take precedence over any other consideration. In view of the above, the Bank of Uganda (BOU) could not have sold UCBL to a better bank than Stanbic. Stanbic’s banking record in Africa is there for all to see.
In a modern economy, the independence of the central bank is as crucial as the independence of the judiciary in a democratic society. One cannot imagine a scenario where judges have to consult with parliamentary committees or the Attorney General before passing sentences in courts of law. In exercising its statutory role of commercial banks supervision, the central bank should be guided by one main principle —the protection of depositors’ interests. This should apply whether government or private individuals own the commercial bank in question. As regards valuation, valuers are not the ones who eventually pay for assets and their valuation reports. though necessary for reference during negotiations, they are not exactly binding on the buyers. The final price is that which the buyer is willing to pay at the time, usually considering factors like the risks involved, and projected profits. In fact, if we may recall, UCB suffered a lot on the issue of valuation over the years whereby potential borrowers overvalued their properties, acquired loans and never bothered to back them up. So, instead of lambasting and threatening the governor of BOU, Mr Tumusiime Mutebile, the MPs ought to praise him for taking a firm stand on the matter. serious investors could easily have ended up withdrawing as was the case with CMB and Uganda Airlines.

Naboth Barahire
Kampala

(adsbygoogle = window.adsbygoogle || []).push({});