Global Trust Bank

Former directors and shareholders of the defunct Global Trust Bank are seeking Shs315.7 billion in compensation for the illegal closure of the bank in 2014 by the Bank of Uganda (BoU).

The directors are demanding full compensation equal to the direct cash equity investments of US$35.3 million with interest at the rate of 10 per cent per annum compound from July 25th, 2014 when the bank was closed and sold in one day.

The Nigerians also want payment of US $50 million in loss of goodwill inflicted on the directors and shareholders on account of the wrongful closure of their bank.

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Led by Bayo Folayan the former Managing Director and Olusegun Oyeyemi a former Shareholder, the executives appeared before parliamentary committee on Commissions, Statutory Authorities and State Enterprises (Cosase) which currently is investigating BoU over the controversial closure of seven banks between 1993 and 2016.

Cosase is using the Auditor General John Muwanga’s special audit report which he released in late August highlighting irregularities in the closure and sale of the assets of the banks by BoU.

Global Trust Bank Uganda (GTBU) was closed by BoU on account of being insolvent and corporate governance weaknesses.

BoU officials while appearing before Cosase said the bank, which had 23 branches at the time of closure, had losses to a tune of Shs60 billion. The Bank which was valued at 75 billion Shillings was transferred to Dfcu Bank in a transaction that took one day. Former BoU executive director of bank supervision Justine Bagyenda told MPs she negotiated with the then Dfcu Bank Managing Director Juma Kisaame to take over the bank.

BoU officials maintain that the bank had no chance to continue operating in the future due to undercapitalization. Interesting BoU staff, under their staff retirement benefits scheme was a shareholder in GTBU. They are also shareholders in Stanbic Bank and Bank of Baroda.

The former owners yesterday said they complied with all the capital requirements as demanded by BoU.

“Our total direct cash equity investment as at July 25th, 2014 was US Dollars 35.2 million or Shs132 billion at today’s exchange rate. The committee is kindly requested to note that we injected over US$10.5 million (about Shs39.5 billion) between January 2013 and 31st May 2014. It is also important to note that the last equity capital investments were made on May 8, 2014,” said Folayan.

He said BoU forced the bank to invest the new equity capital injection strictly in treasury bills much as it could have used a portion of the equity funds to create new loan assets with higher returns or pay off expensive term deposits.

Olusegun Oyeyemi, a former Shareholder in GTB said that the opinion by the Central Bank that they could not make profits in future was extremely speculative. He told COSASE Chairperson Abdu Katuntu that the bank had met all capitalization schedules from the regulator and continued to pump money into the bank.

Elias Edu, the former Company Secretary told the committee that following a demand on the 4th of July 2014 to recapitalize the Bank, the shareholders were not given time to comply and the Bank was shut on the 25th.

They accused BoU selling Global Trust Bank 15 days before they closed it. Edu termed the actions of the BOU as highhanded, reckless and ill-motivated.

The GTB directors also requested the committee to come up with a resolution requesting BoU to release 4 land titles for the properties bought by them from borrowers of GTB.

The land includes 18 acres on Plot 43 and 45, Block 421, Ziru Entebbe, 0.118 acres on plot 13 B, Folio 17, Bugolobi, 4.36 acres on Plot 37, Block 171, Lugala, Gayaza and 0.413 acres on Plot 116, Kogero, Block 443, Entebbe.