BOU distances itself from Crane Bank rumours

The Bank of Uganda on Thursday denied involvement in messages circulating on social media over the alleged impending closure of Crane Bank.

The messages have for the past few days been instructing depositors to withdraw their money from the bank within the next week, or risk losing it.

"It has been brought to our attention that messages have been circulating on WhatsApp instructing depositors to withdraw their money from Crane Bank. We wish to categorically state that these messages were not issued by Bank of Uganda," the statement reads in part.

The Central Bank said: "Shareholders of commercial banks have the option of selling shares to new investors as they deem appropriate, but any new investor in any commercial bank must first satisfy the regulator that they are fit and proper."

The Central Bank also explained that it is normal practice for financial institutions to change shareholding in line with their strategic objectives, and this has happened several times in Uganda.

It has been widely reported on social media that at least 70% of Crane Bank has been sold to South African investors, while other reports claim Bob Diamond's Mara Foundation is buying into the bank but the bank has not confirmed this.

According to some customers, the speculation, and the lack of official position from the bank is what has prompted them to withdraw their money.

Crane Bank is one of the few Ugandan indigenous banks and one of 25 commercial banks licensed and supervised by BOU.

A statement issued by the bank on September 16th, indicates its shareholders decided two years ago, to get a strategic equity investor to consolidate its position in the market.

"The strategy is in sync with the inevitable trend of mergers and acquisitions, not just as an important forum of growth for the purposes of the East African integration, but as a strategic move at a global level too," the statement signed by the banks board chairman, Joseph Biribonwa said.

According to Biribonwa, the strategic equity investor approach is aimed at strengthening the bank's balance sheet further, taking it to the next level with enhanced products and services.

The bank is reported to be in a precarious financial position due to large non-performing loans on its books, hence the search for an investor to offer more capital.

Last year, Crane Bank made total losses of sh3.31b, the first time it was registering a loss in 10 years. By contrast, it made a sh50.64b profit in 2014.