The Bank of Uganda (BoU) took decisive action on June 18, 2024, revoking the license of Mercantile Credit Bank Limited. This move places the bank under liquidation, effectively shutting down its operations.
BOU’s decision, which also places Mercantile Credit Bank, located on Old Portbell Rd, under liquidation, revoked its license, and ordered the winding up of its affairs, effective today, Tuesday.
Mercantile Credit Bank Limited reportedly failed to maintain adequate capital reserves, jeopardizing its ability to meet financial obligations.
The Bank of Uganda raised concerns about Mercantile Credit Bank Limited’s internal governance practices, suggesting potential mismanagement.
“The continuation of Mercantile Credit Bank Limited’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,” said Michael Atingi-Ego, Deputy Governor of the Bank of Uganda.
This event highlights the importance of a robust financial system in Uganda. The BoU’s action aims to protect depositors and maintain stability within the banking sector.
“The Bank of Uganda has determined that the closure of Mercantile Credit Bank Limited is necessary to protect the interests of its depositors and maintain the stability of the financial system,” Atingi-Ego added.
The regulator has assured depositors that they will be informed of arrangements to access the insured portion of their deposits, while creditors have 30 days to submit claims. Borrowers are directed to continue servicing their loans at Bank of Uganda offices.
Mercantile Credit Bank Limited’s financial situation likely deteriorated to the point where it could no longer operate as a viable entity.
The Bank of Uganda’s move serves as a reminder for financial institutions to prioritize strong capital reserves, good governance practices, and responsible management. It’s also an opportunity for depositors to stay informed about their bank’s health and choose institutions that prioritize their financial security.