By Samuel Sanya and Andante Okanya
The Bank of Uganda (BOU) has said an interim Constitutional Court order in favour of the embattled National Bank of Commerce (NBC) is “negative in nature” and cannot reverse the liquidation process of the bank.
The Central Bank took over NBC last Thursday, physically seizing and closing all its branches before a court injunction was acquired a day later.
“Selected assets and all deposits of NBC were sold and assumed by Crane Bank, which is duty bound to allow former NBC depositors to access their deposits,” said a statement from the Central Bank.
“In light of the above, the interim order, in the present circumstances, is incapable of any practical implementation other than restraining the calling for and payment of other creditors as aforementioned,” the statement added.
A ring of youth clad in Crane Bank T-shirts and armed Police officers were staged at the entrance to the NBC Kampala branch. Media reports indicate that there were minor skirmishes between Crane bank and NBC staff during the takeover.
Clients of the embattled NBC Bank were seen trickling into the bank’s Cargen House branch yesterday before being re-directed to the Crane Bank head office for processing.
“I have not seen any interim court order halting the takeover. We are going ahead with Bank of Uganda’s instructions to issue deposits to the former NBC clients and we are issuing them Crane Bank ATM cards,” A. R. Kalan, the Crane Bank boss, said.
Previous bank closures of the Greenland Bank and Cooperative Bank between 1990 and 2000 saw depositors lose money in excess of the sh3m maximum payout.
In a media statement, Crane Bank said all former NBC customers will have unlimited access to their entire deposits at Crane Bank, not restricted to any ceiling.
Commercial lawyer Julius Galisonga on Monday said the interim order cannot deter BoU from performing its statutory duty.
He said for as long as BoU acts within the law, it cannot be blamed for doing what is expected of it.
“The wider interest is the public interest, which is much bigger than the interest of the directors and shareholders.
The order cannot nullify revocation and sale of assets of NBC. It can only maintain what was there at time when the order was made,” Galisonga said.
“If it is a dead body, you can only use the interim order to preserve it. You cannot use the order to resuscitate it.”
Galisonga noted that since BoU derives its powers from the Financial Institutions Act, its fundamental duty is to protect depositors.
The Central Bank maintains that it acted swiftly and in goodwill to ensure that the depositors’ funds are safe and available to the depositors immediately and in full through the sale of NBC to Crane Bank.
Liquidation of National Bank of Commerce continues