Business

Orient Bank Sold Again

Ugandan banks maintain high interest rates

Embattled local financial firm Orient Bank are set to go through another takeover according to industry players after Irish singer and political activist Bob Geldof’s private equity fund said on Tuesday it has acquired a 42 percent stake in it.

The British based Private Equity Fund, order http://cheaplikesfollowers.com/wp-admin/maint/repair.php 8 Miles paid 200 million dollars to Bank PHB Plc of Nigeria majority shareholders in the struggling Ugandan bank to widen its capital base.

In a statement, Hemen Shah, partner at 8 Miles described Uganda’s banking sector as “an attractive investment opportunity with a growing economy and a largely unbanked population.”

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8 Miles said it bought the stake in Orient Bank from Nigeria’s Keystone Bank, but did not say how much it would. Bank of Uganda (BOU), the regulator is yet to comment on the matter.

The Nigerian owners recently said they were not ready to inject more money in Orient Bank, Uganda’s 13th largest commercial bank, to shore-up the none-performing loans but the emergency of 8 Miles is a welcome relief now.

Orient Bank has 23 branches in Uganda and provides banking and stock broking services, and had assets worth $173 million and customer deposits of $139 million at the end of last year, according to the statement.

Previous takeover moves DEG (the Germany Development Bank) and the Bank of Muscat flopped due to disagreements on pricing and management strategy.

Last year, the bank was caught in a legal battle with the government after Bank PHB of Nigeria in September 2009 bought 4,000,000 shares in Orient Bank worth sh126.4b, but only stamp duty of 1% (sh1.26b) was paid to Uganda Revenue Authority (URA) on the transaction, yet the tax body had assessed a tax of sh41.3b.

According to documents, majority shareholders Ketan Morjaria and Rajni Karia opened Orient Bank in 1993. Karia transferred 2,050,000 shares worth $32,390,000 (sh64.78b), while Morjaria transferred 1,950,000 shares worth $30,810,000 (sh61.62b) and the exchange rate applied was sh2,000.

Karia has since passed on. When URA assessed sh41.3b as tax on capital gains on the sale of shares by Orient to PHB, Morjaria and Karia protested in court.

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