The Bank of Uganda (BOU) has placed Mercantile Credit Bank Limited under liquidation, revoked its license and ordered for winding up of its operations after over 30 years of operation.
According to BOU, the action was necessary citing undercapitalization, poor corporate governance and insolvency, posing risks to depositors. Consequently, the regulator asked creditors to submit their claims to the BOU within 30 days and for debtors to continue servicing their loans at the BOU.Mercantile Credit Bank Limited was registered as a merchant bank in 1981 and commenced operations in 1986.“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 Mercantile Credit Bank comes just five months after closure of EFC Uganda Limited, raising concerns about the soundness of the country’s financial sector as it seeks to raise core capital requirements and strengthen the banking sector.
