Court has yet again dismissed a case filed by one of the former owners of National Bank of Commerce Amos Nzeyi challenging Bank of Uganda’s (BoU) decision to liquidate NBC and its assets and liabilities which were sold to the defunct Crane Bank.
In the suit, Nzeyi wanted court to declare that BoU’s takeover of NBC and subsequent sale of its assets to Sudhir Ruparelia’s Crane Bank illegal and done in bad faith.
He said the liquidation of NBC was in breach of the Financial Institutions Act 2004 and should be declared null and void. He also wanted court to hold the central bank liable for failure to supervise the banking sector.
However on Wednesday, the case was dismissed with costs after Nzeyi failed to prove the allegations.
On 27th September 2012, the Bank of Uganda revoked the banking license of National Bank of Commerce. The deposits and branches of NBC were taken over by Crane Bank, as administrator, on behalf of Bank of Uganda. Immediate steps were initiated to wind up the affairs of NBC.
The bank was formed in 1991, and was named Kigezi Bank of Commerce, with a mission to provide banking services and inexpensive loans to the Kigezi Community. During the mid-1990s, the Gidoomals, a family of Asian descent and Kenyan citizenship acquired 86% shareholding in the bank.
In April 2008, the Gidoomal brothers sold their shares to Amos Nzeyi, Amama Mbabazi and Ruhakana Rugunda. The three, together with former Ugandan Finance Minister, Ezra Suruma, are shareholders and Directors of the bank. In July 2011, Emirates Link, an Abu Dhabi investment company, acquired shareholding in NBCU. Ugandan media reports indicated the bank will begin offering Islamic banking later in 2011.
In May 2012, the Ugandan Commercial Court directed the bank to appoint a new board of directors and to proceed with recapitalization, in order to stay solvent.