Overview:
dfcu Bank ordered to pay UGX 810 million in land title dispute, raising questions about the bank's handling of inherited assets from GTB liquidation
KAMPALA, Uganda — A Ugandan court has ordered dfcu Bank, a prominent financial institution, to pay 810 million shillings in damages, raising questions about its handling of asset transfers following the acquisition of Global Trust Bank (GTB). The Commercial Division of the High Court ruled the bank improperly refused to release land titles to 27 individuals who purchased property from Hosanna Real Estates Ltd., land that was tied to a GTB loan.
The case stems from GTB’s 2013 liquidation by the Bank of Uganda. dfcu Bank subsequently acquired some of GTB’s assets and liabilities. The dispute centered on a parcel of land in Wakiso district, part of which Hosanna Real Estates was to retain after a loan default agreement with GTB. However, GTB’s collapse stalled the title transfer for the remaining 8.96 acres, which Hosanna had already sold to the plaintiffs.
Judge Suzan Abinyo found that the 8.96 acres were not part of GTB’s assets that dfcu legitimately acquired. This raises concerns about the due diligence process during the acquisition and the clarity of asset identification. The court rejected dfcu’s argument that it only managed select GTB transactions, stating the bank inherited the liabilities.
The ruling underscores the legal responsibilities of acquiring institutions to address obligations tied to inherited assets. The Commissioner of Land Registration was also faulted for the delayed transfers.
The financial penalty for dfcu includes interest, and the case carries potential reputational risks for the bank. It highlights the complexities of bank liquidations and asset transfers, serving as a cautionary note for financial institutions involved in acquisitions. The ruling also emphasizes the need for a transparent land registration system to protect property rights during such transitions.