The local banking industry has added another top executive William Sekabembe as the new Managing Director of Dfcu Bank and will work closely with new Chief Executive Officer Mathias Katamba to drive the bank to great heights. But that will be achieved if the bank doesn’t involve in unclear dealings again, like it happened with the purchase of Global Trust Bank (GTB) Uganda and Crane Bank Limited (CBL).
The two executives take new positions as Dfcu Bank in one way or the other is attached to a court case involving Bank of Uganda (BoU). Recently over 400 employees said they intend to sue Dfcu Bank for loss of their jobs and want compensation in billions of shillings. It remains to be seen how the two men together with the board will handle the issues mentioned.
The two men also assume their positions at the time when the Dfcu board has issues as well as some shareholders wanting to exit, such as Britain’s CDC Group. They will have to work hard to convince them to stay. They would want the bank to be more profitable. The bank hit record high profits only when it assumed the assets and liabilities of CBL but now it appears that might never happen again.
The bank recently increased its Uganda Shilling Prime Lending Rate to 21 per cent per annum from 20 per cent, citing; recent developments in the macro economic environment.” It appears it is following Bank of Uganda’s (BoU) Monetary Policy Committee (MPC) which last month raised the Central Bank Rate (CBR) by 1 percentage point to 10 per cent to keep inflation close to the target of 5 per cent and need to maintain economic growth.
Analysts say Dfcu Bank should have maintained or lowered its PLR for Shilling loans to keep the current and attract outside clients. That means, they say, Sekabembe and Katamba will have to work extra hard by way of developing new strategies that can entice clients borrow at 21 per cent rate which is above the average the industry’s PLR in the country, at least from the recent figures. That is not being helped by management’s decision to close some of the branches.
The two executives also assume positions at the time when all is not well amongst shareholders, with Britain’s Commonwealth Development Corporation (CDC) Group months ago stating its intentions to sell its shares. It is said CDC Group was not happy with the way how outgoing Managing Director Juma Kisaame was running the business especially his role in Dfcu’s controversial acquisition of CBL.
The two men also assume their offices at the time when parliament has started the process of pinning BoU officials on liquidation and sale of seven commercial banks of which Dfcu Bank acquired two-CBL and Global Trust Bank Uganda. The inquiry which started yesterday is likely to see Dfcu top gurus summoned to answer some questions. For instance, of Shs200 billion Dfcu Bank is supposed to pay BoU, the Auditor General John Muwanga in his special audit report of BoU on defunct banks, says Dfcu had already paid over Shs90 billion as agreed in the purchase and assumption agreement. And the exist of the long serving Managing Director, Kisaame has made it worse on how the new top gurus will explain the transaction before parliament given that they have just assumed these offices.
The two men in their new positions will together with the board of Dfcu Bank continue to right what went wrong at the institution which has been making headlines in the local media. Next time they will be cautious when dealing with BoU in any business transactions. Parliament is yet to bring out more dirt in the on-going inquiry on defunct banks and Dfcu owners and managers are is hoping their names do not come up.