Ugandan regulator to sell bank's assets despite court order
KAMPALA, Oct 1 (Reuters) - Bank of Uganda (BoU) will ignore a constitutional court order to halt the sale of assets of the National Bank of Commerce (NBC), which it seized last month, the central bank said, cementing its image as a hard-line regulatory body.
On Sept. 27, the central bank announced it had closed NBC - a small bank with only three branches that was partly owned by Ugandan Prime Minister Amama Mbabazi - and scrapped its licence.
BoU said it took the decision under the 2004 Financial Institutions Act (FIA) because NBC's operations were jeopardising the interests of its customers.
BoU has tightened its regulation of the financial services industry since a string of bank collapses in the late 1990s and early 2000s has hampered growth in east Africa's third-largest economy. Analysts credit the strong oversight regime for contributing to the sector's health in recent years.
On Friday, NBC's directors obtained a Constitutional Court order to prevent BoU from selling the bank's assets and winding up the company until the Court can rule on their lawsuit, which has challenged the seizure of the bank.
The regulator said, however, the order could not stop the closure.
While NBC can question the constitutionality of the banking act, "the provision prevents any court from entertaining any application for stay of proceedings in relation to the liquidation or winding up of a financial institution," BoU said in a statement over the weekend.
BoU's move to close the bank follows years of wrangling among NBC's directors over ownership and several failed attempts to recapitalise the bank.
(Reporting by Elias Biryabarema; Editing by Drazen Jorgic and Jane Baird)
Keywords: UGANDA BANKING/