The Governor Bank of Uganda, Emmanuel Tumusiime Mutebile has maintained that the Central Bank was right to intervene and close down the seven defunct Banks and that he has no regrets for having taken such a decision.
The Governor made the revelation on Thursday while appearing before the Parliamentary on Commissions, Statutory Authorities and State Enterprises (COSASE) as part of the ongoing probe into the closure of seven defunct banks.
The banks include; Crane Bank Limited, Greenland Bank, National Bank of Commerce, Global Trust Bank, Teefe Bank, International Credit Bank and Cooperative Bank.
Mutebile began by appreciating the committee under the chairmanship of Bugweri County MP, Abdul Katuntu for allowing them an opportunity to respond to the issues that were raised by the Auditor General’s report.
“I thank you in particular for your candid approach to tackling issues that we believe needed to have been addressed or put into account by staff of Bank of Uganda. I express my appreciation to the Auditor General for his report which raised issues which will help improve the operations of Bank of Uganda,” Mutebile said.
He added that the Central Bank acknowledges the relevance of the evidence that has been presented and is confident that it will enhance transparency and accountability which the bank intends to uphold.
“It has been a learning process to the management and staff and I am confident that resulting from this process, we will review our processes and policies in order to strengthen our capacity to perform the functions of the Central Bank better,” Mutebile said.
Mutebile vowed to put in place measures that translate into a stronger institution and visibly push the confidence of the public in the central bank.
He added that the staff changes which were made in February, 2018, were intended to address some of the challenges that they had earlier detected but have now become even more evident in the last few weeks. Mutebile said that further changes and remedial actions will be taken in the due course so as to restore the good image of the bank.
“Let it also be clear that Bank of Uganda in any case was right to intervene in the financial institutions, delay to act, failure to act, lack of decisiveness on the action taken, would have easily led to contagion, financial crisis, danger to savers, borrowers, businesses and the economy at large,” the Governor told the committee.
He added, “If we had not intervened, the committee would be carrying out a different kind of probe.”
“Back in 2008, the lack of decisiveness from regulations led to a global financial crisis, the House of Commons in UK and House of Representatives in the U.S asked a different question and that was, ‘What happened to our economy’,” Mutebile said.
“We take solace from the fact that we have not had to answer that question, the challenges we have seen relate to post-intervention processes in commercial banks which the Central bank will seek to review.”
“I reiterate that the Central bank interventions into the finical institutions is well intentioned on protecting the depositors, increasing confidence in the banking system and fostering financial sector stability which has been achieved in all the cases we have intervened,” he said.
