National Bank of Commerce Closed, Depositors to Use Crane Bank

7057 Views Kampala, Uganda

In short
Bank of Uganda has taken over the management of the National Bank of Commerce (NBC) effective Thursday September 27, 2012.

Bank of Uganda has taken over the management of the National Bank of Commerce (NBC) effective Thursday September 27, 2012. 
 
According to a press statement issued by Louis Kasekende, the Deputy Governor Bank of Uganda, all National Bank of Commerce depositors will operate their accounts in Crane Bank Ltd.
 
The statement says the central bank has closed NBC and taken over its operations and management because its activities are detrimental to the interests of its depositors. The central bank accordingly suspended NBC’s management as well.
 
Kasekende said NBC will remain closed until further notice, adding that Bank of Uganda will shortly inform its depositors of the arrangements that will be put in place to enable them access their deposits.
 
On its website the Bank of Uganda says the NBC depositors will temporarily use Crane Bank, owned by business tycoon Sudhir Ruparelia.
 
The Bank of Uganda, which oversees the financial sector, assures NBC’s customers and the public that it will protect the interests of the depositors and maintain the stability of the financial sector.
 
At NBC’s headquarters on Yusuf Lule Road, customers were not being allowed to transact business as the officials paced up and down under the watchful eyes of police officers.
 
The bank’s chairman, former investment minister Mathew Rukikaire, could not be reached for a comment.
 
The closure of the National Bank of Commerce comes against the backdrop of ownership disputes between the few majority shareholders who own 86 percent of the bank and 320 other shareholders who own just 14 percent.
 
The majority shareholders are Prime Minister Amama Mbabazi, Crown Beverages chairman Amos Nzeyi, and Information and Communication Technology Minister Dr. Ruhakana Rugunda.
 
The minority shareholders, who include former Supreme Court Judge George Kanyeihamba and former health minister Jim Muhwezi, contend that the bank's name was changed from Kigezi Bank of Commerce to National Bank of Commerce without their consent.
 
But they lost a bid to stop the majority shareholders from selling shares or carrying out any other transactions.
 
In March this year, the Bank of Uganda appointed an advisor to NBC on its affairs. The central bank then said the move was intended to protect the depositors of the bank whose shareholders are in the process of resolving an ownership dispute.
 
In July 2011, the Bank of Uganda approved the purchase of 49 percent of the NBC shares by an Abu Dhabi investment company, the Emirates Link.
 
In 2008, two of NBC’s biggest shareholders, Mbabazi and Nzeyi, were embroiled in a saga in which they sold their land in Temangalo near Kampala at 11 billion shillings to National Social Security Fund to recapitalize the bank.
 
They were believed to have used their influence to arm twist NSSF to buy the land at an inflated price.
 
Interestingly, while announcing the monetary policy statement for August, Bank of Uganda Governor Emmanuel Tumusiime Mutebile, who is also a shareholder in the bank, declared that all 25 commercial banks in Uganda are on a sound footing.
 
The NBC was formed in 1991. In 2009 it was the 22nd biggest bank out of 23 then with an estimated combined asset base of about 50 billion shillings.

 

About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.


In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.


I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."