The Bank of Uganda (BOU) has shut down Mercantile Credit Bank Limited (MCBL).
The action, effective immediately, revoke MCBL’s license and orders the bank to wind down its operations.
BOU cited MCBL’s undercapitalization, poor corporate governance, and insolvency as reasons for the closure. These factors, according to BOU, posed risks to depositors.
“This action is necessary because the Bank of Uganda has determined that the continuation of Mercantile Credit Bank Ltd’s activities is detrimental to the interests of its depositors due to the institution’s failure to resolve its significant undercapitalization, poor corporate governance, and insolvency,” Deputy Governor, Dr Michael Atingi-Ego said in a statement.
As a result of the closure, creditors must submit claims to BOU within 30 days while debtors should continue making loan repayments to BOU.
“The Bank of Uganda and the Deposit Protection Fund of Uganda (DPF) will shortly inform all depositors of the arrangements that will be put in place to enable them to access the insured portion of their deposit(s). The uninsured portion of the deposits will be handled in accordance with Section 105 of the Financial Institutions Act 2004, as Amended.” said BOU in a statement.
The closure of MCBL follows the closure of EFC Uganda Limited just five months ago. This raises concerns about the health of Uganda’s financial sector, particularly as BOU seeks to strengthen the banking sector by raising core capital requirements.
Mercantile Credit Bank Limited (MCBL) was incorporated in Uganda on December 1981 and only commenced operations in July 1986.
