Swallowed A Big Elephant? Crane Bank Deal Pushes dfcu Into Red Zone As Losses Mount

By Frank Kamuntu

Nearly a decade after businessman Sudhir Ruparelia lost his bank to dfcu Bank, the controversial acquisition is proving increasingly costly for the lender, with mounting legal bills from a multi-billion-shilling court battle in London pushing the bank into a first-half loss.

dfcu on Tuesday warned shareholders that it expects to post a net loss for the six months ending June 30, 2026, citing soaring legal expenses tied to the long-running Crane Bank dispute before the Commercial Court in London.

The announcement marks the first time the legal fallout from the acquisition has significantly eroded the bank’s profitability, despite continued growth in loans, deposits and overall assets.

According to its unaudited interim results, dfcu recorded a Shs15.8 billion net loss during the first half of 2026, compared to a Shs34.5 billion profit over the same period last year.

Ironically, the bank’s core operations remained robust.

Operating income rose by 8 percent to Shs215.6 billion, customer deposits increased to Shs2.87 trillion, the loan portfolio expanded to Shs1.44 trillion, while total assets climbed to Shs3.94 trillion.

However, those gains were wiped out by a sharp rise in operating expenses, which jumped 53 percent to Shs230 billion, largely driven by legal costs associated with defending the Crane Bank litigation.

The dispute stems from the collapse of Crane Bank in 2016 after the Bank of Uganda placed it under statutory management before selling selected assets and liabilities to dfcu in January 2017.

Ruparelia, Crane Bank’s former majority shareholder, has consistently maintained that the bank was solvent and accuses the central bank and dfcu of orchestrating what he describes as a fraudulent takeover of one of Uganda’s largest indigenous financial institutions.

He argues that the bank’s assets were transferred at a grossly undervalued price following a flawed resolution process that lacked an independent valuation.

Those allegations form the backbone of a lawsuit filed before the English High Court, where Ruparelia, Crane Bank Limited stakeholders are seeking more than £170 million (approximately Shs840 billion) in damages.

dfcu has strongly denied the claims, insisting that the acquisition complied with Ugandan law and was conducted under the supervision of the Bank of Uganda following findings by PricewaterhouseCoopers (PwC) that Crane Bank had become significantly undercapitalised.

The legal battle has nevertheless become an expensive burden for the lender.

In its 2025 Annual Report, dfcu disclosed that it spent Shs76.6 billion on legal fees related to the case, nearly doubling the Shs42.3 billion incurred the previous year.

With the trial now only weeks away, litigation costs are expected to remain elevated, potentially extending into 2027 depending on the outcome and any subsequent appeals.

Nearly ten years after Crane Bank disappeared from Uganda’s banking landscape, the acquisition that Ruparelia insists was a fraudulent takeover continues to cast a long financial and legal shadow over dfcu, one that the London Commercial Court is now expected to examine in detail later this year.