In July 2014, news came about the disappearance of Crane Bank Managing Director AR Kalan. Kalan was for long associated with the inception and growth of the bank from a forex bureau into an outfit with many branches in Uganda and Rwanda.
Like many founding managers, Kalan was known by many of its customers. In the public, his name was synonymous with Crane Bank, so much that his departure was never expected even if it was likely to happen someday. Rumours of his disappearance were therefore likely to cause anxiety amongst customers who have significant deposits with the bank.
Along with the rumors of his disappearance came the rumours of major fraud at the bank that led to a loss of at least Shs 60 billion of customer deposits. His departure was then linked to the fraud.It was a difficult time for Crane Bank.By many accounts it was the most challenging moment of its history. How they managed this crisis would determine whether the bank would survive or not. How Crane Bank Weather edits PR Storm Worse still, it came at a time when other banks had been closed and tremors of uncertainty were ongoing in the banking industry.
The bad news about Crane Bank then spread faster through social media,a space where anything can be said with no remorse. Social media users brought up other issues with the bank that were not linked to the rumours. It was clear that the bank was struggling to deal with these rumors and prevent its collapse. In such circumstances,if customers feel their deposits are threatened, they may shift their deposits to other banks and leave the bank in a crisis. In some instances it could call for investigations from Bank of Uganda,the industry regulator, to verify if the deposits of customers are well protected.
At first Crane Bank did not seem to know what to do. There were sporadic statements from its management and members online. It did not help matters that Kalan was silent and there were no indications of which side of the world he was at the time. At first, in an apparent panic, the bank issued a very detailed communication to show how firm and stable the bank was. It was circulated online and in the press. This did not help either. It consisted of too many details which were not easy to internalise by the consumer who wanted a simple revelation that everything was alright with their deposits.
It was evident that Crane Bank was taken unawares and needed to go back to the drawing board to work out a plan that would help quell the rumours. In a few days the bank devised a plan.The first part of the plan was to explain the whereabouts of Kalan and the reason for his absence. They issued a statement and said that the Managing Director, AR Kalan, had taken a leave of absence up to September to take care of a relative who had a brain tumor. “Mr Kalan is on leave with the approval of the Board of Directors, on granting an extended leave the Board appointed one of its Executive Directors Mr. P. K. Gupta, a seasoned Banker, as the acting Managing Director,” said J. N. Biribonwa, Chairman Board of Directors.
“The Board is pleased to announce that in compliance with the requisite regulations governing Financial Institutions, Mr. P.K Gupta is the acting Managing Director until further notice. We appreciate the ever growing support of the Bank’s clientele all over the country as the spread of the branch network continues.”
The statement went to great lengths to show that the acting MD had been Kalan’s deputy for some time and had extensive experience of running banks in Uganda and in India. The of this was to demonstrate that client’s deposits would be secure and the bank would run things professionally even in the absence of Kalan.
Crane Bank then moved to quell rumors about the stolen client deposits.They issued statements of denial and also issued statements of accounts that showed that the customer deposits were intact and safe.
“Our attention has been drawn to rumours surrounding the absence of Managing Director, Mr. A. R Kalan, from office. A variety of rumours which range from there having been a loss of USD 18 million, to the loss of Shs. 60 billion etc are baseless and unfounded. They should be ignored,” said Biribonwa.
Customers were invited to check with the bank for more information about their deposits and on the progress of the bank. The bank also outlined its expansion programme that was ongoing, as a promise of stability. It was evident that the bank was determined to control the damage caused by the rumours. To build more confidence amongst customers, Crane Bank sought the intervention of the banking industry regulator Bank of Uganda. The central bank issued a statement that Crane Bank was a formidable bank and the rumours were unfounded. This statement of support helped to right the sinking ship.There are many lessons to learn from the Crane Bank experience. Public relations requires a coherent strategy that is proactive in nature. It also requires a strategy to deal with circumstances that may emerge at various moments in the operations of an organization, as demostrated by the crisis at Crane Bank.