Dfcu Bank has reversed its decision to acquire 48 disputed properties sold by Bank of Uganda following the collapse of Crane Bank.
In its 2019 annual report released on Wednesday, Bank of Uganda said dfcu Bank had opted out of the acquisition of the properties held under a Ruparelia Group subsidiary - Meera Limited.
“… dfcu in a letter dated September 12, 2019 communicated … its decision to exercise its option to rescind its interest in purchasing the 48 properties pursuant to clause 8.7 of the agreement,” the report, which touches a number of issues, including the court cases brought against the Central Bank, reads in part.
The report further said: “As part of rescinding of the purchase, dfcu will return to Bank of Uganda certificates of title for Meera Investments Limited properties and requires Bank of Uganda to pay to dfcu the net book value of the properties recorded in the assets and inventory compilation report as at October 20, 2016.”
It is not yet clear how much Bank of Uganda will be required to refund.
Dfcu’s decision came after Bank of Uganda lost a case against businessman Sudhir Ruparelia and Meera Limited.
In August, High Court Judge David Wangutsi ruled against Crane Bank in receivership and ordered Bank of Uganda to pay costs after it was proved that Crane Bank did not have the jurisdiction to sue since it was in receivership at the time the case was filed.
The Central Bank appealed the ruling and the case was fixed for hearing on November 27.
Dfcu Bank has since acquisition of Crane Bank in 2017 faced court cases and has been a target of numerous media reports purported to be fake.
For instance, a fake notice was recently shared on social media and online media indicating that the bank would close at least 22 branches.
In a statement, dfcu said there was no plan to close any branch, noting that the bank was reinforcing its digital strategy which would include rationalisation of the branches.
Dfcu bank was already engaged in a court case filed by Meera Ivestments last year, over the rightful ownership of the 48 properties.
Meera claimed that it was the registered owner of the freehold and mailo interests, before dfcu took possession of the same acquired in the liquidation of Crane Bank.
In its defense, dfcu said the properties were transferred by Bank of Uganda in accordance with regulatory requirements.
“The transfer and handing over of the possession of the 48 leasehold certificates of titles was effected by BoU under regulatory powers,” dfcu said in documents filed before court.
Purchase of Crane Bank and payment
Bank of Uganda accepted Shs200b in receivables from dfcu Bank for the sale of Crane Bank assets and liabilities in 2017.
The payments, which were meant to start in the last quarter of 2017, were payable over a period of two and a half years.
According to the report, dfcu Bank had as at June 30, 2019 paid Shs140b with an outstanding receivable of Shs60b.
The balance on the Crane Bank account, Bank of Uganda says, was Shs258b of which Shs60b is due from dfcu and Shs217b is due from Crane Bank.
However, the Central Bank has now rendered the amount due from Crane Bank impaired due to uncertainty of its recoverability.