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Wednesday, 17 October, 2001, 11:17 GMT 12:17 UK
Uganda's largest bank for sale
Uganda parliament in Kampala
Parliament is unhappy that UCB is being sold to a foreign firm
The proposed sale of Uganda's largest bank to South Africa's Standard Bank may face a legal challenge.

Standard Bank of South Africa (Stanbic) has won the right to buy an 80% share in the Uganda Commercial Bank (UCB) from the Ugandan government.

Stanbic beat competition from major multi-national banks such as Standard Chartered and Barclays for the stake in Uganda's largest commercial bank.

The decision by Uganda's Central Bank to sell to a foreign bank is controversial as the country's parliament recently passed a resolution, calling for UCB not to be sold into foreign hands.

Andrew Owiny, an executive director at MBEA Brokerage in Kampala, told the BBC's World Business Report that members of the Ugandan parliament now want to approach the constitutional court to try to undo the agreed sale.

Government strategy

It is thought that the government will eventually float the remaining 20% on the stockmarket in Kampala.

Mr Owiny believes the government is committed to this strategy.

"It happens to be a major policy of the government nowadays to sell portions of formerly owned government companies to the public so I think that is a definite," said Mr Owiny.

The first attempt at privatising UCB, in 1998, involved the sale of a 51% stake in the company to Malaysian Group, Westmont Berhad.

The deal collapsed after Westmont failed to pay the agreed fee and was accused of acting fraudulently.

Uganda's Central Bank took over UCB in April 1999 following the collapse of this deal.

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Andrew Owiny, MBEA Brokerage in Kampala
"It is the second time an attempt has been made to sell it"
See also:

06 Mar 01 | Business
Uganda's economic test
26 Jul 01 | Country profiles
Country profile: Uganda
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