Tanzanian lender buys up Imperial Bank’s shares in Uganda subsidiary

Shares in Imperial Bank’s Ugandan subsidiary have been sold to a Tanzanian bank for an undisclosed amount.

Imperial Bank of Kenya had a 58.6 per cent stake in the Ugandan unit, which gave it control.

However, yesterday, Bank of Uganda (BoU), which is the country’s central bank, said it had sold the troubled Kenyan firm’s stake to Tanzania’s Exim Bank.

Exim Bank is one of the biggest banks in Tanzania, and also has operations in Djibouti and the Indian Ocean island state of Comoros.

BoU did not reveal how much the sale of the majority stake in Imperial Bank Uganda fetched, but an audit valued it at about Sh1.25 billion.

The Central Bank of Kenya (CBK) is expected to receive the proceeds of the sale.

Imperial Bank had invested Sh858 million in the Ugandan subsidiary as at 2014 when the unit had gross assets of Sh7.9 billion.

“Bank of Uganda (BoU) has recently sold 58.6 per cent ordinary shares of Imperial Bank (Uganda), formerly held by Imperial Bank (Kenya), to Exim Bank (Tanzania) Ltd,” Emmanuel Tumusiime-Mutebile, BoU’s governor, said in a statement yesterday morning.

The sale now marks the end of Imperial Bank’s operations in Uganda, and comes at a time when the lender’s shareholders are fighting to stop CBK from winding up the Kenyan unit.

Imperial Bank of Kenya was put under receivership last year by CBK after it emerged that the lender had lost over Sh38 billion of depositors’ cash through a long-running scam.

This saw BoU take over the management of Imperial Bank Uganda, before putting up the stake for sale.

Changed Name

The Ugandan regulator said Imperial Bank (Uganda) has now changed its name to Exim Bank (Uganda) and appointed a new board of directors.

“Therefore, BoU has today, 7th March 2016, ended its statutory management in Imperial Bank (Uganda) Ltd, now Exim Bank (Uganda) Ltd,” the regulator said in a statement.

This makes Exim Bank (Uganda) the new majority shareholders of the bank.

 

BoU said in the statement that operations and services of Exim Bank (Uganda) would continue normally.

But unlike its Ugandan counterpart, CBK has chosen a different path. After putting Imperial Bank under receivership, it started a process of paying small depositors at the bank.

Shareholders are worried that the process will eventually result into liquidation, fears that have seen them rush to court to block the regulator from going that direction.

A forensic audit by a British firm, FTI Consulting, revealed how just eight members of one family that largely deals in the fish business conspired with the bank’s top managers to siphon billions of shillings from the bank.

WE Tilley accounted for Sh34 billion of the Sh38 billion that was stolen in one of the biggest such thefts to strike Kenya’s financial sector.

The FTI audit found that the bank’s senior management, led by its late group managing director Abdul Janmohamed, ran a long-running and systemic fraud by running a hidden ‘parallel’ bank.

The parallel books and financial statements were never disclosed to the board or reported, concealing the true position of the bank.

Masterminds of the theft had snapped up millions of shares at the Nairobi Securities Exchange, bought high-end property in Kenya and abroad, and put billions of shillings in fixed deposit accounts by the time the fraud was discovered and the bank put under receivership.