Prime Bank chairman Rasik Kantaria is on the spot over following the placement of Uganda’s Crane Bank under receivership over irregular lending.
Mr. Kantaria is a long-serving director and the second largest shareholder in Crane Bank with a 47.32 per cent stake. He owns his Crane Bank stake through an investment vehicle dubbed White Sapphire Ltd, and has served on the Ugandan lender’s board for more than a decade.
Crane Bank is controlled by Ugandan tycoon Sudhir Ruparelia, who has a 48.67 per cent stake, held directly and through his wife Jyotsna, daughter Sheena and son Rajiv.
Ugandan authorities placed Crane Bank in receivership on October 20, 2016 and immediately suspended the nine-member board of directors, as well as the bank’s executives, saying the bank had failed to meet the legal requirements of its operating licence.
The Bank of Uganda (BoU) said in a statement that Crane Bank was “significantly undercapitalised”, adding that the lender posed a systemic risk to the stability of the financial system.
“The continuation of Crane Bank’s activities in its current form is detrimental to the interests of its depositors,” the BoU said.
Crane Bank’s total capital to total risk-weighted assets ratio was at 12 per cent at the time of the takeover, short of the statutory 18 per cent for significant banks, according to the BoU.
Crane Bank’s volume of non-performing loans and advances stood at USh142.358 billion (KSh4.15 billion) as at December 2015, accounting for a quarter of Uganda’s banking sector bad loans that stood at USh573.4 billion (KSh16.72 billion), according to BoU data.
Mr Kantaria has vast interests in property, tourism and financial services not only in Kenya but across the continent.
He chairs the boards of multiple firms, including Tausi Assurance and Leisure Lodge Beach and Golf Resort, and is a director in First Merchant Bank of Malawi, where Prime Bank directly controls 11.24 per cent and a further 11.24 per cent through Prime Capital Holdings Ltd, a wholly-owned subsidiary.
Mr Kantaria’s directorships in Malawi include The Leasing and Finance Company of Malawi Ltd, a deposit taking lender, and BNC Packaging Ltd, a logistics firm.
Prime Bank indirectly owns a minority stake in Capital Bank of Botswana, given that First Merchant Bank controls 38.6 per cent of the Gaborone-based lender.
