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By Moses Kaketo
Started by Dr. Sudhir Ruparelia and wife Jyotsna in August 1995, Crane Bank rapid growth and success has been a subject of discussion. The Bank grew so fast, to become the third largest financial institution in the country challenging multinationals like Standard Chartered, Stanbic Bank and Barclays bank. The bank also won several global accolades. After several months of speculation, the Bank of Uganda finally took over Crane bank.
The news of the bank’s collapse aside, there are great lessons for business.
Train and appoint locals in management positions
Crane Bank’s top management and senior managers are said to be foreigners. While these managers helped the bank in the early days to grow, it was time to employ more Ugandans in top management positions. When rumour circulated on social media that the Bank was on the verge of collapse- No foreign manager could give satisfactory assurance to the customers. The argument was that, these managers would ‘runaway’ when the bank closes. It would be a different case if the senior managers including, branch managers were local people.
Lesson: It is important to appoint influential people [as Board chairman/members, CEO’s etc with a clean record] these, will defend the business in hard times since they have the trust of the people.
When to sell the business
Businesses outgrow their founders-which calls for a different strategy to move the business to another level. At this point, the business needs to tap into those with management and financial expertise.
Locally, Biyinzika Poultry International, Kampala International Hospital among others did exactly that. They sold their businesses, but kept some shares. Today, these businesses are doing well and the former owners are happily doing other things. Besides earning from the same business.
Across the border, in Kenya, business mogul Chris Karubi sold Insurance firm-UAP to Old Mutual, although business was booming.
Shun praise singers
Sudhir’s office on 4th floor Crane Bank building Kampala road was a beehive. Sudhir’s ‘friends’ kept flocking in for business.
However, when news of Crane Bank troubles started flocking in, the ‘friends’ disappeared in thin air. Sources say, one of the first people to transfer his money from Crane Bank was his close friend and a leading media personality/ media mogul.
Lesson: Shun praise singers and those who tell you only good things.
Go slow on takeovers
Crane Bank problems reportedly started when it acquired National Bank of Commerce (NBC)-previously owned by former Prime Minister Amama Mbabazi and Bank of Uganda governor Emmanuel Tumusiime Mutebile, Amos Nzeyi and others.
Speaking recently on Impact FM 98.4 FM, presidential advisor on the media, Tamale Mirundi claims the former owners of NBC could have played a role in the fall of Crane Bank. The Daily Monitor recently quoted a senior Crane Bank official saying the acquisition of NBC intensified after NBC takeover.
The other businesses that Sudhir acquired include: Kampala Parents School in Kololo and a host of other properties in and around Kampala. There are unconfirmed reports that these properties and businesses where acquired through unethical means.
Mr. Ofwono Opondo, the head of Media Center, the official government mouthpiece tweeted: Let the owners and Crane Bank management pay for the mismanagement and unethical behaviors’’. Whatever, the case, Sudhir and Crane Bank brand was damaged by acquisitions and takeovers.
Lesson: some opportunities may be lucrative, but may in the long run bring you down. Also goodwill cannot be underestimated.
The media is no longer the king
As a friend of the media [Crane Bank/ Sudhir was a major advertiser], as such, the media kept off Crane Bank/ Sudhir’s dark side. This did not stop information about Crane Bank’s ‘dark side’ from circulating.
It is good to be friends with the media, but letting the free flow of information, is a more sustainable model. Over the years, there was a lot about Crane Bank in the public arena [rumours], which needed to be cleared- there was no room for that, since no media house would dare publish such.
Lesson: How does the community view your business? Sometimes it’s fine for people to talk about your business. It gives you time to clear the air before it is too late.
Cost is a key factor in business
Crane Bank opened its doors in 1995. Twenty years later, the bank had reached 46 branches housed in own buildings. Never mind that a sizeable number of these branches had not broken-even, 5+ years since they were launched. While Crane Bank boosted of huge asset base, these assets [buildings] could not rescue the bank at a time when the bank badly needed liquidity.
Given the stiff competition in the banking sector, Crane Bank reportedly paid heavily [read bribes] to acquire government accounts. As such the Bank needed some good years to recover these costs.
Lesson: In whatever, you do, go slow, but sure. It is never too late.
It is evident; A.R Kalan played a pivotal role in Crane Bank phenomenal growth. It is said, Sudhir trusted Kalan with the business. While it is not clear why Kalan left, his departure clearly had a great impact on Crane Bank’s future. The claim that Kalan left with some ‘little money’ is immaterial now. It is clear is that Kalan’s successor knew nothing about the business.
Lesson: successful business put in place structures that enable continuity. Recruit, train, motivate and retain best talents. Businesses should live beyond individuals.
How does the market see your business?
Sudhir, a major Shareholder in the defunct Crane Bank, owns several buildings in Kampala. It is said, Sudhir is among the real estate investors who charged tenants in dollars.
Reports indicate those who did not pay promptly, found their shops locked and only reopened after full payments. This did not go down well with tenants. They always viewed him and his investments with envy. Could this be the reason why there was some sort of jubilation on social media when his bank was ‘closed’?
Lesson: separate your business entities from yourself or better treat your customers [tenants] with some human aspect you may need them one day.
While Crane Bank has fallen apart, that is not the end of Sudhir Ruparelia. Sudhir who was a few years ago named East Africa’s richest man [Forbes] has interests in Media, Insurance, Education, Hospitality and real Estate. It is said, Sudhir could have used Crane bank resources to extend his other businesses. While Sudhir may be moaning his bank, it’s not the end of life.
Lesson: Never put all your eggs in one basket. You need to have an ‘exit’ route just in case one route is blocked.
Lastly, be in good books with the government. What else can we say……
More about the author: Moses Kaketo