Reading the Tea Leaves at Crane Bank

On October 20, the Bank of Uganda (BoU  – the country’s banking regulator) took over (PDF) the management of  Crane Bank and stated that:

  • (Crane was( significantly undercapitalised (and) poses a systemic risk to the stability of the financial system (and) ..  in its current form detrimental to the interests of its depositors.
  • BoU  appointed a statutory manager and suspended the Board of Directors of Crane Bank
  • Crane Bank will remain open and its operations will continue normally, but under the management and control of BoU.

Tweets about Crane Bank Crane Bank was started in 1995 and was said to be the fourth largest bank in Uganda. It had 46 branches in Uganda and 2 in Rwanda, where the bank regulator has said that the Crane Rwanda subsidiary licensed in 2014 is solid and will remain unaffected by the closure of the parent in Uganda.

In its 2015 supervision report, the Bank of Uganda made reference to the performance of domestic systemically important banks - Stanbic bank, Standard Chartered bank and Crane bank which accounted for 36% of total banking sector assets. ..there was a decline in asset quality among D-SIBS with NPL ratio rising from 3.5%  percent in December 2014 to 7.6% (and) while this reflected the general performance of the banking sector, the decline in quality among DSIBs was also on account of the performance of one bank with a significant exposure to one borrower. All the DSIBs have adequate capital to absorb losses.

Crane Bank is an award-winning indigenous bank in Uganda, and was audited by KPMG. Like Chase Bank in Kenya it was said to be a fast growing, darling of entrepreneurs, paid higher interest rates to depositors, and progressive in its outlook to entrepreneurs and business people – with lot’s of referrals by word of mouth and repeat business from customers.

But one difference from Chase Bank is that while there was the bank was very inactive on social media , Crane had posted only 2 tweets this year even as there was a storm of social media posts leading to the take over last week.

The 2015 annual report of Crane notes that:

  • The Bank’s loans & advances reached  UGX 1,010.9 Billion against UGX 836.9 Billion in 2014  
  • Customer Deposits grew from UGX 1,267.5 Billion in 2014 to UGX 1,336.6 Billion in 2015 indicating the growing confidence of our patrons and customers.
  • The bank added about 75,000 accounts during the year, pushing the total number of accounts to 499,133 as of December 2015.
  • The bank is controlled by Dr Sudhir Ruparelia who controls 48.67% of the voting rights in the bank.. at 31 December 2015 advances to companies controlled by directors or their families amounted to Shs. 1,003 million (2014: Shs 4,639 million). All the above loans were issued at interest rates of 16% (2014: 16%) and were all performing as at 31 December 2015 and 2014.
  • The aggregate amount of non performing loans and advances was Ushs 142,358 million (2014 – Ushs 19,362 million).
  • As at 31 December 2015, the bank had no exposures to a single borrower or group of borrowers exceeding 25% of its total capital
  • (importance in tax collection) The bank maintained its position among top collection agents for UMEME / NWSC and (is) in Ppartnership with URA to do all URA PIN generation and KCCA COIN registration and all URA & KCCA payments. Bill payment is currently enabled through Internet banking.

Other news stories:

  • A few months ago, the bank’s principal shareholder spoke with Red Pepper about the impending sale of a stake in the bank.
  • The East African has a story on how employee tipoff may have led, government, large and foreign depositors to withdraw huge sums from the bank as talks with suitors like Atlas Mara got more complicated.

$1 = ~UGX 3,414. 

Understanding Telephone Farming

Many people in Nairobi and other towns and in the diaspora are ‘telephone farmers’. These are people who own or have  bought, or inherited land, buildings, equipment on rural farm that they now support. They send money a few times  a month for salaries and for operations of  agricultural ventures that never seem to  have any significant payback.

The owners probably read the Saturday newspapers with envy as they see other farmers holding up rabbits, bananas, watermelons or other bounty from their farms which earn them thousands of shillings every week or month.


The difference between them and the typical telephone farmer is that they are active investors as farmers, not passive which is what a faraway telephone farmer is.  That leads to the first point about telephone farming.

  • The goal of telephone farming is asset preservation, not income generation, and doing some economic activity on a distant farm protects it from invasion by squatters or grabbers.
  • The social aspect: Telephone farming sustains the local community; it keeps a line of communication open and allows for the community to have a stake in the preservation of the asset as they go about their business. The picture (above) depicts what should be a banana farm, but clearly the beans the workers are growing in the same field are doing much better. There might be pilferage, misuse of equipment, or other losses: but they should be within tolerable limits and not erode the underlying assets.
  • The costs of farming are much lower for telephone farmers compared to other businesses  investment in urban areas. E.g. labour costs are much lower: an amount of  Kshs 2,000 is a salary on many farms, but that could be an electricity bill in Nairobi.
  • A good rule of thumb for the telephone farmer is to be present at the farm during major operations like planting and harvesting.

Bank Mergers & Musical Chairs in 2016 – Part II

Following part I stanbic

Stanbic: Eight years after the merger between Stanbic and CFC banks, which created CFC Stanbic, Stanbic has rebranded and removed the “CFC” name completely from the bank. The 2008 merger created the number 4 bank in Kenya, and today it is about number 7 in assets with 25 branches and listed on the Nairobi shares exchange. The Stanbic brand will now be common in the 20 countries across Africa.

Bank M (of Tanzania) published a statement, denying they are the majority owners of the former Oriental Commercial Bank in Kenya – now known as M Oriental since June 2016. It states that MHL is a Kenyan entity that is promoted by some shareholders of Bank M, but that it does not have direct ownership.

QNB: Qatar National Bank continues to run quarterly newspaper ads on it’s size in Kenya without being linked to any Kenyan bank. Today’s newspaper which touts them as the largest financial institution in the Middle East and Africa region, with September 2016 assets of $196 billion (up 37%) and profits of $2.7 billion (up 11%).

Wadi Degla Kenya Opens

Last week, Wadi Dela opened the first of their five planned clubs for Nairobi Kenya.


Adel Samy, the  Wadi Degla chairman,  spoke of the rapid pace of their investment, thanks to their local partners, and  that all the buildings and sport facilities had  come up in just nine months, transforming a swamp area into a modern sports and lifestyle club for members. He’s been marketing Kenya for several years, encouraging other investors and spoke at the TICAD business summit last month, to Japanese investors. Other clubs are planned for Uganda, Nigeria,  Cote d’ Ivoire, Rwanda, Dubai, and the  GCC.

William Kabogo, the Kiambu Governor, said his government had approved the club application in a week and urged other to set up in Kiambu where they already have an investor pipeline of $3-4 billion. They plan a one-stop investor centre which will be showcased at a  unique county summit next month.

wadi-open-2Earlier in the day, the group directors met President Kenyatta and sports minister Arero Wario said that the  President was the first member at the Wadi Degla Kenya clubs, and that  Kenyans needed to diversify into more sports in order to keep winning olympic medals. Wadi Degla will have professional sports academies including Swim America, WD Tennis, Wakiihuri Athletics, Arsenal Soccer, and Darwish Squash. The Runda club will have squash, handball, volleyball, tennis, basketball, soccer pitches, and several swimming pools for training and kids. Other leisure and recreational facilities include a gym, (Angsana Thai) spa, dancing school (salsa & tango), r restaurants, bars and lounges.

Tullow to truck Oil from Turkana to Mombasa

Tullow Oil has an advert in the newspapers today seeking suppliers to help it transport oil from  Lokichar, Turkana to Mombasa. There are two requests:

  • For registered truck companies in Kenya, that have new vehicles, and experience transporting hazardous material.
  • The other is for a lease of 100 pressurized insulated containers of 25,000 liters each. (Presumably these T11 standard containers can also be transported by railway).

There is a bit of regional and domestic politics here. While Uganda seems to have opted to refine its oil and ship it out via a pipeline in Tanzania, Kenya wants to show that it can deliver on that in the short-term.

Trucks on a highway (via

Trucks on a highway (via

Also the Jubilee government is checking off all its pre-election promises and while the one to prioritise the construction of an oil pipeline from South Sudan and a new oil refinery at the coast may not materialize, expect by the August 2017 elections to have a barrel of Kenyan oil shipped out from Mombasa, regardless of the means of transport or the cost of production.

Once oil is trucked to the coast, the long-term picture could see a lowering of the costs and perhaps  re-engagement by other countries in the region on the suitability of shipping oil through a pipeline in Kenya.