Prime Bank distances itself from Crane Bank mess

Prime Bank distances itself from Crane Bank mess

Mid tier lender Prime Bank has stressed that it has no ties to Uganda’s Crane Bank which was placed under receivership by the Bank of Uganda.

This follows revelations of the common shareholding between the two banks by Kenyan businessman Rasik Kantaria.

Mr Kantaria who is the chairman of Prime Bank, is the second largest shareholder in Crane Bank with a 47.3 percent stake.

He is also the single largest shareholder of Prime Bank, having opened it in 1992.

In a statement, Prime Bank management says the bank has no facilities or exposure through the collapse of Crane Bank.

“Prime Bank is a professionally run financial institution regulated by the Central Bank of Kenya. We are fully compliant and strictly follow the prudential guidelines laid down by the Central Bank of Kenya,” the bank said in a statement in the dailies.

Crane Bank was placed under receivership on October 20, for irregular lending practices.

“We wish to clarify that Prime Bank has no shareholding in Crane Bank and neither does Crane Bank have any shareholding in Prime Bank,” the bank stressed on Wednesday.

According to the Bank of Uganda, by the time of being placed under receivership, Crane Bank’s risk weighted assets ratio was at 12 percent, way below the statutory level of 18 percent.

The bank also had Sh4.15 billion (Ush142 billion) in nonperforming loans, the highest level in the Ugandan banking sector.

The bank’s directors were all removed from office after the takeover, but Mr Kantaria is said to have resigned before the receivership.

The news comes amidst shake up of the local banking sector, with the Central Bank of Kenya (CBK) keen to strengthen bank supervision after the collapse of three banks in under a year.

The Ugandan government has since injected Ush200 billion into the bank to prevent an imminent collapse of the bank.

The government is believed to have been spooked by the fact that the collapse of Crane Bank posed a risk to Ugandan economy.

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