WHAT HAPPENED TO CRANE BANK
If we are to interrogate and turn all tables and Stones, there are several indicators that are likely to affect us but thank God we haven’t and we might be in control and not be hit as a country though a little shaken.
In this Article for purposes of readers to understand, I will avoid disturbing terms such as Equity, Asset, Liability and many Economics terms for the lay man to understand.
Crane Bank is suffering from Four Problems. 1. Is Ugandans, 2. Is Ugandans, 3. Ugandans and 4. Ugandans.
I have tried to investigate and tried touching in scary dark spots trying to understand what am unleashing unfortunately the Challenges are within our confinement.
The Brand Crane Bank will be no more because of Four Ugandans.
Ugandan Number One.
The Bank fell out of Business because of NON PERFORMING LOANS. When one is given two years to Pay back a loan, and their is an excess of relatively 90days in the period required and the Neither the Principal nor Interest is Paid, that automatically becomes a Non Performing Loan and as per the regulations, the bank is required to fill that Gap in order for the depositors Money that was Loaned to be secure upon the time its needed for withdraw.
Therefore Crane bank had Generated more than 900Billion as NPL or bad debts and it wasn’t in its conformity. This Money is in the hands of Ugandan Number one.
Ugandan Number Two.
The Properties used as Collateral, have either no forced sale value as Recorded, affected by two Factors either the forced sale value was stretched or no buyers in the market following the decline of the Real Estate. Therefore the Ugandan who borrowed from the bank, made losses and s/he could not Pay back and the bank can’t fill up for him therefore both the borrower (Ugandan number two) and the bank are both put of the Market.
The Third Ugandan.
When Non Performing Loans accumulates to a Certain amount, and your Securities in Bank of Uganda are not enough to fill the gap and the Money in the Bank in Circulation can neither bridge the Gap, the Share Holders are Required to recapitalize, this means, shareholders in addition to there contributed capital and and what they might have accumulated in the past not forgetting loses (Equity) is replaced by a debt that is what usually calls for Recapitalization.
Therefore when the restructuring was called, the Equity of Shareholders could not sum to the total amount that were required in order to bridge the gap caused by the Non Performing loans. Which threatened the depositors Money therefore to save the situation, the Crane Bank had to succumb to receivership under BoU.
Therefore the Third Ugandan who is the Owner of the Bank, has been failed by the First Ugandan who Borrowed from the third Ugandan and the Second Uganda who failed to buy the Collateral at required amount or failed buy the goods of the the First Ugandan that he borrow the money for, therefore it means that the First, the Second and the Third Ugandan are in Trouble.
The fourth Ugandan.
Because the First Ugandan Borrow, and was not supported by the the second Ugandan to pay back the loan, and the third Ugandan is out of Business therefore the fourth Ugandan who is Employed by Crane Bank, has also to go back home. Take a Deep breath and think about it.
In my other Articles I will be bringing to you the challenges attacking the Banking sector or who is likely to survive and not. And also the risks Ugandan Businesses are likely to face.
Have a Blessed Week.
Herbert Anderson Burora
Chairman Concerned Citizens
Youth Leader, Analyst and Political Commentator.