Court Blocks Takeover of National Bank Of Commerce

2673 Views Kampala, Uganda

In short
The Constitutional Court on Friday evening blocked the takeover of the management of National Bank of Commerce (NBC) until the substantive application challenging the move is heard and disposed of. The order comes at a time when the Bank of Uganda was set to effect the takeover of NBC tomorrow.

The Constitutional Court on Friday evening blocked the takeover of the management of National Bank of Commerce (NBC) until the substantive application challenging the move is heard and disposed of. The order comes at a time when the Bank of Uganda was set to effect the takeover of NBC tomorrow.

 Bank of Uganda, through its Deputy Governor Dr Louis Kasekende, announced on Thursday that it was taking over the management of NBC, citing among reasons the bank's operating below the required standard capital of 10 billion Uganda shillings.

But dissatisfied with the decision, Humphrey Nzeyi, the director of NBC and a son to one of the majority shareholders and businessman Amos Nzeyi, asked the Constitutional Court to halt the takeover process arguing that NBC owners had not been heard before the Central Bank took its decision to wind up the bank.

Mr Nzeyi also said he had been deprived of his right to own property which is a constitutional right.

Bank of Uganda had said in a press statement that NBC depositors will operate their accounts in Crane Bank.

The interim order was issued by Justice Steven Kavuma in the presence of Nzeyi’s three lawyers led by Fred Muwema. It will stay in force for three months.

The implication of this order is that the status quo of NBC remains by carrying on with its financial operations as it has been doing until such a time when the substantive application is heard and determined.

The respondents to this application who included; Bank of Uganda and the Attorney General were not represented in court as the matter was treated as urgent since the Central Bank was set to effect its takeover of NBC tomorrow.

Justice Kavuma also directed the registrar of the court Erias Kisawuzi to expeditiously have the main application of this matter heard and determined.

Mr Kisawuzi said he would fix a hearing date for this matter on Monday. 

The other majority shareholders of NBC include; Prime Minister Amama Mbabazi and ICT Minister Ruhakana Rugunda.

The trio share 86 per cent of the bank shares amongst themselves with the remaining 14 per cent owned by 320 other investors including Mr Ezra Suruma, Maj. Gen Jim Muhwezi and retired Supreme Court Justice George Wilson Kanyeihamba.

NBC started as Kigezi Bank of Commerce in 1993 to provide banking services and inexpensive loans to the people in the south-western sub-region of Kigezi.

This development comes at a time when there was a deep rift between the minority shareholders questioning how Mr Mbabazi, Mr Nzeyi and Mr Rugunda acquired majority shares in the bank and where they got the powers to register a public bank as a private bank without their authorisation.