The former owners of National Bank of Commerce (NBC) on Monday told parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) that the Bank of Uganda (BoU) closed their bank illegally and as such demanded that they be paid compensation of
Shs295 billion for loss of business.
The former shareholders who included former Prime Minister Amama Mbabazi were meeting MPs at parliament to give their side of the story. BoU senior officers said last year they closed NBC due to undercapitalization, even though on Thursday former owners told MPs they were in the process to comply with the capital requirement when BoU officials led by Deputy Governor Dr Louise Kasekende, former Executive Director of supervision, Justine Bagyenda and Ben Sekabira,
a senior banking officer then decided to sell the bank to Crane Bank Limited (CBL).
NBC had capacity to meet the necessary capital requirements but was closed, said Matthew Rukikaire, who was presenting defence on behalf of other NBC shareholders. He said NBC was the only bank owned by indigenous people and for that, he said BoU should have taken caution
before closing it.
Rukikaire said BoU failed to play its role of supervision as it should have done. He said BoU even failed to appoint an auditor to take the inventory of NBC assets and liabilities. He also said BoU on failed to make a forensic audit on NBC.
He also wondered why BoU did not present a liquidator’s report even as they had appointed one to supervise the bank after the takeover. He said BoU closed NBC when its assets where more than customers deposits. They said at the closure of the bank, they had invested
US $1.7 billion and US $1.2 billion on the transformation of the headquarters and investment in new technology.
The shareholders in their presentation said that at the closure of NBC, it was making profits and paid dividends and that it had plans to open four more branches in Kampala and other towns in the country.
“BoU did not consider the investments above before closing the bank,” Rukikaire said, continuing that they had also raised some seven billion shillings for investment in treasury bills.
“Ms Justine Bagyenda directed that Shs7 billion be invested in treasury bills, not banking business. Which affected NBC, he said. He said Bagyenda and Sekabira were determined to take NBC out of business. NBC’s land worth Shs400 million was transferred to CBL at
Shs300 million.
NBC was closed on September 27, 2012 due to undercaprtahzation among other reasons. BoU took over the management of NBC in line with section 88(1) (a) and (b) of the Financial Institutions Act 2004 and subsequently placed NBC under liquidation pursuant to section 89 (2) (D & section 99 (1) of the Act. In line with section 95(b) of the Financial Institutions Act 2004, BoU arranged for the Purchase of Assets and Assumption of Labilities of NBC.
NBC was one the seven commercial banks closed by BoU between 1993 and October 2016. The others were Teefe Trust Bank, Greenland Bank, International Credit Bank, Global Trust Bank Uganda, Cooperative Bank and CBL.