BoU authorizes downgrade of three banks
Three commercial banks applied to downgrade to credit institutions, and the Bank of Uganda (BoU) granted their request.
ABC Capital Bank (U) Limited, Guaranty Trust Bank (U) Limited, and Opportunity Bank Limited are the three commercial banks listed by BoU.
The transition period for these banks is set to last three months, from April 1, 2024, to June 30, 2024.
According to a public notice issued by Deputy Governor Michael Atingi-Ego, The three-month transition period will give these commercial banks time to make the necessary preparations to phase out products and procedures that call for a Tier 1 license.
According to the deputy governor, this is done to minimize any impact on the stability of the financial sector and to guarantee a seamless service transition for their clients.
This application came about as a result of commercial banks’ expected inability to meet phased capital requirements, which called for them to raise their capital buffers from SHs 25 billion to SHs 120 billion by June 2022 and SHs 150 billion by June 30, 2024.
Finance Minister Matia Kasaija announced the revision of the minimum capital requirement instrument in June 2022, and it went into effect on December 16 of the same year.
The tool provides financial institutions—commercial banks and credit institutions included—with until June 30 to meet the capital band requirements in order to strengthen and expand commercial banks’ liquidity buffers and guarantee shock resilience.
