DFCU Chairman Dr Elly Karuhanga

On July 6, the Chairman of DFC Bank Dr Elly Karuhanga addressed the media in Kampala countering earlier media reports that major shareholders were hatching plans to pull out of the bank. Karuhanga maintained that all was well at DFCU.

Yet one wonders if all was well at the bank, then why should major shareholders hatch plans to pull out of the business which posted over Shs120 billion in the year ending December 31 2017.

Of course Arise B.V.Chief Executive Officer, Deepak Malik has said they have no intention of selling their shareholding in Dfcu.But Malik made that statement after it emerged from within the bank itself that they were contemplating what next after the Commonwealth Development Corporation (CDC) in a leaked letter to Karuhanga showed its intention to exit DFCU Bank.

That CDC in a letter dated June 14, asked for the discussions to remain confidential says a lot of what is happening at the bank that controversially bought its rival Crane Bank. The case related to the sale of the latter is in court. Meanwhile the Auditor General’s (AG) Office is investigating Bank of Uganda (BoU) over the same deal as demanded by parliament following an outcry from Crane Bank shareholders and whistleblowers from BoU.

Let us take it that Arise B.V.is staying and that is good given they are the largest shareholders with 55 per cent. However the timing of CDC’s exit plans is suspicious especially at the time when DFCU Bank is party to the sale of Crane Bank. Analysts say it would be good for CDC to leave after the court case is concluded. If allowed to leave soon, CDC would leave other shareholders.The new suggested Cranemere Africa Limited and responsAibility Investments AG (the Strategic Investors) would face some challenges even as due diligence check would be applied before any transaction of CDC’s 10 percent shares can take place.

Arise B.V. acquired a majority stake (55 per cent) in DFCU Limited, the company that owns DFCU Bank, after providing up to US $50 million to the bank to help it meet short-term capitalisation needs after the latter took over Crane Bank in January 2017.
Much as Karuhanga allayed fears on the impact of the exit of the British Investors CDC, saying that reducing shareholding is always normal, the public knows that all is not well at the DFCU Bank.
BOU which supervises about 24 commercial banks in Uganda needs to come up and give a clear statement on whether CDC’s intentions to leave at this time is okay even though BOU is accused together with DFCU of mishandling Crane Bank transactions.

The Capital Markets Authority which tracks companies listed on the Uganda Securities Exchange (USE) also has a role here to play as DFCU Bank is listed on the USE.
The intervention of the two institutions is important in confirming whether all is well at DFCU Bank as claimed by top executives.
There are reports that some time back representatives of Dfcu Bank’s European shareholders came to Uganda on a fact-finding mission in regard to the suit filed against DFCU Bank by Meera Investments.
Owned by businessman Sudhir Ruparelia, Meera Investments has dragged DFCU Bank to Land Division of the High Court, seeking to reclaim its 46 branches that were allegedly acquired illegally following the dissolution of Crane Bank. Whether this indicates that all is well as DFCU Bank is a matter of debate.

But top managers need to provide right answers as regards the current status of the bank that made headlines in the media as it made huge profits six months after acquiring Crane Bank assets worth over a trillion Shillings, having agreed to pay a paltry Shs200 billion to BOU in installments, never mind that BoU claimed to have injected taxpayers’ Shs200 billion in Crane Bank before handing it over to DFCU Bank.