Must Read: The Heavy Price dfcu Is Paying for the Crane Bank Takeover

By Frank Kamuntu

Nearly a decade after acquiring selected assets and liabilities of the defunct Crane Bank, dfcu Bank says the protracted legal battle over the controversial transaction has significantly weighed on its financial performance, pushing the lender into a loss despite continued growth in deposits, lending and total assets.

In a trading update released on Tuesday, dfcu attributed its projected first-half loss for the six months ended June 30, 2026, largely to escalating legal costs arising from the ongoing Crane Bank litigation before the Commercial Court in London.

The bank said it expects to post a net loss of Shs15.8 billion, reversing the Shs34.5 billion profit recorded during the corresponding period in 2025. Before tax, the lender projects a loss of Shs26.3 billion, compared with a Shs39.7 billion pre-tax profit registered in the first half of last year.

The results underscore how the long-running dispute over the acquisition of Crane Bank has evolved from a legal contest into a significant financial burden for one of Uganda’s largest commercial banks.

Despite the loss, dfcu’s core banking business continued to record positive growth during the review period.

According to the bank’s unaudited interim financial statements, customer deposits increased by Shs410 billion to Shs2.87 trillion, while the gross loan book expanded to Shs1.44 trillion. Total assets also grew to Shs3.94 trillion, reflecting continued customer confidence and expansion of the bank’s balance sheet.

Operating income rose by eight per cent to Shs215.6 billion, indicating that the bank’s underlying operations remained resilient even as exceptional costs eroded profitability.

However, those gains were overshadowed by a sharp increase in operating expenses, which climbed 53 per cent to Shs230 billion. The bank attributed much of the increase to legal fees associated with defending the Crane Bank case in the United Kingdom.

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

The transaction has remained one of Uganda’s most contentious corporate and banking disputes.

Businessman Sudhir Ruparelia, the former majority shareholder of Crane Bank, has consistently challenged the acquisition, arguing that the bank was solvent at the time it was taken over and that the resolution process was unlawful.

He contends that Crane Bank’s assets were transferred to dfcu at a grossly undervalued price through a process that lacked an independent valuation and amounted to what he has described as a fraudulent takeover of one of Uganda’s largest indigenous financial institutions.

Those claims now form the basis of proceedings before the English High Court, where Ruparelia and other Crane Bank stakeholders are seeking more than £170 million (about Shs840 billion) in damages.

dfcu has denied the allegations, maintaining that the acquisition was undertaken lawfully under Uganda’s banking laws and under the supervision of the Bank of Uganda.

The bank argues that the transaction followed findings by PricewaterhouseCoopers (PwC) that Crane Bank had become significantly undercapitalised, necessitating regulatory intervention.

As the litigation has intensified, so too have the associated legal costs.

According to dfcu’s 2025 Annual Report, the bank spent Shs76.6 billion on legal expenses related to the Crane Bank dispute, a substantial increase from Shs42.3 billion incurred in 2024.

With the London trial expected to commence within weeks, legal costs are likely to remain elevated, raising the prospect of continued pressure on the bank’s earnings should the case extend into appeals.

Nearly ten years after Crane Bank ceased operations, the legal battle continues to cast a long shadow over Uganda’s banking sector.

While Ruparelia maintains that the acquisition was fundamentally flawed and deprived shareholders of the true value of the bank, dfcu insists it acted within the law and in accordance with regulatory directives.

The Commercial Court in London is now expected to determine the competing claims in a trial that could have far-reaching financial and legal implications for both parties and potentially reshape one of Uganda’s most closely watched corporate disputes.