Wednesday, November 30, 2016

#Uganda #MoneySense: Micro Finance set to buy #CraneBank




Microfinance wants to buy Crane Bank


  • The market is now offering $100m, yet the bank is worth $350m
  • Stanbic, Barclays bank express interest in the bank
  • Bank needs up Ugx. 500 for recapitalization
  • Sudhir gives up on Crane bank
Just like the other commercial banks [Teffe Bank, Global Trust Bank, National Bank of Commerce, Nile Bank, Greenland Bank, etc] that have been taken over by the Central bank in the recent past, Crane Bank chances of recovery have become so slim.
This is after all the probable investors have disappeared in thin air, while the shareholders seem not interested in injecting in capital to revamp the bank. On the other hand, the bank’s liabilities have continued to grow, Analysts predict, the Bank might wind up early next year.
Sources say, Sudhir Ruparelia, seem to have  noticed this and has almost given up on the bank. Sources at Crane Bank  add that he has now given the Bank of Uganda ‘powers’ to search for a buyer.
This comes at a time when latest and expectant buyer-a Sri Lankan financial institution failed to meet the Bank of Uganda test. Sri Lanka is an island nation south of India in the Indian Ocean.
Sources say, the Sri Lankans investors and  Sudhir had reached an understanding after two weeks of talks at Speke Hotel in Munyonyo.
However, sources, close to deal told Newz Post that when the BoU did a background check on the investors, it was discovered that the financial institution was a micro finance and not a commercial bank.
A number of investors have expressed interest in Crane Bank in the recent past, including Diamond’s Atlas Mara Group, NedBank of South Africa, etc.  However, these investors disappeared into thin air after reading into the bank’s accounts.
Before the bank was taken over by BoU, the Atlas Mara Fund was willing to buy Crane bank at $250m. However, the deal failed to materialize after Crane Bank management reportedly refused to write down the Ugx. 60 billion [debts] off the bank’s balance sheet.
Sources both at BoU and Crane Bank told Newz Postthat while the Crane bank is estimated to be worth US$ 350m, the market is now offering $100M.
It is said that Crane bank’s liabilities have continued to grow that shareholders now need up to Ugx. 500 billion to get the bank back on the road.
Crane Bank incurred losses of Ush3.31 billion ($872,068) for the year ending December 31, 2015, its first reverse in a decade, after a profit of Ugx.50.64 billion in 2014. The loss arose from a huge stock of non-performing loans that forced the bank to increase provisions to Ugx.50.35 billion ($14.7 million) in 2015 from Ugx.11.22 billion, previous year.
Crane Bank’s bad loans alone accounted for a fifth of the sector’s bad assets. According to Bank of Uganda’s records, non performing loans in the banking industry ratio stood at 8.3 per cent in June this year compared with the 7.5 percent recorded in December 2015.
With little hope of shareholders raising capital to recapitalize the bank and potential investors disappearing into thin air, the BoU is left with one option-to sell off the bank.
According to analysts, this is expected early next year.
According to the Financial Institutions Act 2004, when BoU takes over a bank: “Where the financial institution does not comply with prudential standards within six months after its being placed under statutory management, the Central Bank shall close the financial institution and place it under receivership.”
The regulator is expected to sell Crane Bank assets to existing commercial banks. The shareholders will then be required to pay up liabilities. According to the law- Person director’s liabilities, director’s property can be attached to recover existing debts.
Enter Stanbic and Barclays bank
Highly placed sources revealed that  Stanbic bank and Barclay’s bank have developed an appetite for Crane Bank accounts. These include performing loans, fixed deposits and existing customer deposits.
In July, Bank of Uganda 2014 , took over Global Trust Bank before selling it off to dfcu Bank Ltd. All Global Trust Bank borrowers were required to serve their their loan obligations with dfcu Bank Ltd. The same is expected of Crane Bank if things fail to work out.

http://nangalama.blogspot.com/2016/11/uganda-moneysense-micro-finance-set-to.html?m=0

ORIGINAL SOURCE IS: 
http://newz.ug/microfinance-wants-to-buy-crane-bank/

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