Uganda Bank Group Faces Challenges

FOLLOWING the recent acquisition by the Exim Group of 58.6 per cent of the former Imperial Bank of Uganda, Exim Bank has said that there will be no job losses at the Ugandan bank, renamed Exim Bank-Uganda.

Exim Bank-Tanzania Chief Finance Officer Suleiman Ponda told Business Times in an exclusive interview that the immediate intervention will be alignment of the bank to the Exim Group, headquartered in Tanzania.

“There will be an alignment of operations, as well as improvement of the Uganda subsidiary’s infrastructure and branches network,” he told Business Times in a telephone interview – adding enthusiastically that “the staff had exhibited an exceptional spirit to the cause of the bank during the period of transition!”

Exim Bank announced the acquisition this week, after the Ugandan bank had been under receivership of the central Bank of Uganda (BoU).

BoU placed the former Imperial Bank Uganda under receivership in October 2013, following a similar action on the parent company by the Central Bank of Kenya (CBBK next-door as accounts of fraud at the lender surfaced.

However, speaking during the acquisition announcement, Ponda said Exim Bank Tanzania Limited (“Exim Bank”) carried out a rigorous due diligence of the bank before buying the stake.

He told the media this week that the acquisition process was completed under purview and supervision of Bank of Uganda.

Following the acquisition, Exim Bank now holds  the majority stake in the newly formed Exim Bank Uganda Ltd, while ‘Amazal Holdings’, the prestigious ‘Mukwano Group’ having diversified business interests within and outside Uganda, holds 36.5 per cent share and the rest 4.9  per cent by Export Finance Ltd.

The bank – which was founded as Imperial Finance & Securities Company Ltd, and commenced operations as a financial institution in 1992 – had 28 branches in Kenya, and five in Uganda.

 “I am happy and excited to announce that Exim Bank has established its foot print in Uganda, in partnership with one of the most eminent and largest business groups in the country,” Ponda bubbled with enthusiasm.

 “There could not have been a more opportune time to make entry into Uganda through such an alliance, when the EAC (East African Community) itself has been actively engaged in leveraging the capacity of all the Community’s member countries in the Region,” added Ponda.

Exim Bank – the largest indigenous Bank in Tanzania – is completing 19 years after its establishment, having started operations with one branch in Dar es Salaam in August 1997!

The bank now has 37 branches at strategic centres across Tanzania, as well as two Subsidiaries overseas. The Bank’s Total Assets were at Tsh1.250 trillion (around US$580 million) as on December 31, 2015 with Shareholders Funds of nearly US$90 million.

Exim Bank-Tanzania has two banking subsidiaries in the Comoros and Djibouti, with the 3rd having been established in Uganda recently!

“The bank has traversed a cherishing journey having faced the nuances of an indigenous bank, and coming out with flying colours, always.  It makes us proud to be continually recognized as ‘One of the Most Innovative Banks in the Region,’” Ponda stated.

Exim Bank-Uganda shall have the privilege of making a strong beginning with a set of five well-established branches in Kampala, and an asset base of nearly $100 million.

Headquartered along Hannington Road with a branch at the ground level, the bank has more than 100 dedicated, loyal staff.

“We are proud to have such a bunch of committed staff,” Ponda stated, adding:  “we are also very thankful to both the Bank of Tanzania and the Bank of Uganda for their worthy approval and valued support in this landmark beginning.”

The expansion will enable Exim Bank to strengthen its presence across East Africa, thereby fulfilling its vision to become a strong regional player – and, in the process, creating a powerful platform for future growth in the region.

Exim Bank has once again exhibited a penchant for spotting the right opportunity. Businesses on both sides of the border are expected to give a thumbs-up to the bank for raising their confidence to explore upon a plethora of opportunities on cross-border trade between the two friendly nations within the East African Community.

Exim Bank has to its credit several pioneering initiatives – the salient being the launch of the first-ever Credit Card in Tanzania way back in the year 2005, doing so in affiliation with MasterCard International.

Exim Bank posted stellar financial performance for the Year-2015, with the bottom line, profit-after-tax, posting a record growth of 80 per cent over the previous year: Tsh30.666 billion (US$14 million).

The Uganda Central Bank Governor, Prof Tumusiime-Mutebile, was recently quoted as saying that the sale of the Imperial Bank stake to the Tanzanian multinational has effectively ended the regulator’s statutory management.

Imperial Bank-Uganda was yet to record a profit, having sunk deeper into the red with a loss of Ksh671.1 million as of December 2014 — up from Ksh63.5 million the year earlier! The bank had commenced operations only in January 2011!

In 2012, the Imperial recorded a loss of Ksh1.7bn. The bank’s Non-Performing Loans (NPLs) stood at Ksh9.12bn in 2014, down from Ksh11.3bn in 2013.

On Oct.13, 2013, the Bank of Uganda – the regulator of the banking industry – announced that it had “temporarily” taken over the management of Imperial Bank-Uganda as a “precautionary measure” to protect customers’ deposits.

By the end of 2014, the Imperial Bank’s core capital had shrunk to USh24.1 billion. However, shareholders – who included the Mukwano Group and the Imperial Bank of Kenya – saved the bank’s capital from further depletion and possible BoU sanctions with an injection of USh2.3 billion from issuing 2,300 ordinary shares of Ush1m each in January 2015. This brought the bank in line with regulatory requirements.