The Governor Bank Of Uganda (B.O.U), Tumusime Mutebile, in a letter dated 27th Jan 2017 stated that DFCU Bank ltd had taken over the control and management of all assets and liabilities of Crane Bank ltd.
This didn’t come as a surprise to many since Crane Bank had as of 20th Oct 2016 been declared insolvent by the Central Bank (B.O.U). It was found to be undercapitalized with its liabilities grossly exceeding its assets.
This undercapitalization was found to be mainly due to the presence of Non-Performing loans. Many people were using short-term loans to finance long-term investments like building houses for rent thus failing to pay back these loans in time.
Nonetheless, the Central Bank ought to be applauded for doing a good job in making sure that depositors didn’t lose their money and the financial sector was kept relatively stable.The Governor B.O.U said; “B.O.U reassures the public that it will continue to protect depositors’ interests and maintain the stability of the financial sector.”
However, inspite of this assurance, some Economists predict that Crane Bank’s collapse could have dire effects on Uganda’s economy with foreign investors leaving the Ugandan market.
Will people also resort to keeping their money under pillows and mattresses? …your guess is as good as mine.