Is Ham’s loan from Diamond Trust bank a syndicated loan?

Is Ham’s loan from Diamond Trust bank a syndicated loan?

Kampala, Uganda | THE INDEPENDENT | Did Hamis Kiggundu acquire a syndicated loan from Diamond Trust Bank -DTB? This will be one of the many questions that will face the Court of Appeal and the legal fraternity as a whole.

Diamond Trust Bank filed a notice to appeal the ruling in which the commercial court declared the activities of DTB-Kenya in Uganda, including lending to Ham Enterprises and Kiggs International, as well as deducting money from his accounts to repay the loan, illegal.

The commercial court agreed with Ham that DTB Kenya could not carry out such financial institution activities in Uganda, since it was not registered in Uganda.

DTB Uganda and DTB Kenya had advanced credit facilities amounting to 41 billion shillings, to the companies owned by Hamis Kiggundu, but as the companies continued to pay, DTB Kenya through DTB Uganda continued to deduct money from his accounts in Uganda, which according to him had totaled over 100 billion shillings.

The Bank of Uganda, in pronouncing itself on the case, agreed that DTB Kenya was not registered or licensed in Uganda but added that it did not have to, since it was not taking public deposits of Ugandans, not lending out of money collected from Ugandans.

The 24-member Uganda Bankers Association said it intended to join Diamond Trust in appealing the decision which they said was putting at risk the loan syndication business which in Uganda is currently at about 5.7 trillion shillings.

When asked whether the credit facilities were advanced as a syndicated loan, Uganda Bankers Association could not be clear on this.

What is a syndicated loan?

A syndicated loan is one that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial banks or investment banks known as lead arrangers.

The borrower can be a corporation, a large project, or a sovereign government.

The loan can involve a fixed amount of funds, a credit line, or a combination of the two.Syndicated loans come as a result of a project being too large to be financed by a single lender or when a project needs a specialized lender with expertise in a specific asset class.This will also ensure reduced risk since the uniting lenders will be able to share it.According to Uganda Bankers Association Chief Executive Officer, Wilbroad Owor, syndicated loans require an arranger.“It could be your lead bank or it could be a financial consulting […]

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