Three commercial banks have been authorized by the Bank of Uganda to denominate from a tier I commercial banks operations to tier II credit institution license operations. The three banks according to a statement signed by the deputy governor, Bank of Uganda (BoU), Michael Atingi-Ego are ABC Capital Bank (U) Limited, Guaranty Trust Bank (U) Limited and Opportunity Bank Limited.
Apparently, the three banks have been given three months starting in April to June to make the requirements to turn into a tier II operating system. According to BoU, this is intended to ensure a smooth service transition for their customers. Besides, this is also aimed at mitigating any disruption to the stability of the financial sector.
“The Bank of Uganda (BoU) hereby informs the public that three commercial banks have been authorized to transition from a Tier I Commercial Bank License to a Tier II Credit Institution License effective July 1, 2024. These are; ABC Capital Bank (U) Limited, Guaranty Trust Bank (U) Limited, and Opportunity Bank Limited” the notice from BoU reads in a part.
Additionally, the statement read that the change of the status of these three commercial banks to credit institutions follows decisions by their respective board of directors. This was to adopt a strategic shift to reposition these institutions to serve their core customer base better.
“These three banking institutions have been granted a transition period of three (3) months, starting from April 1, 2024, to June 30, 2024, during which they will make adequate arrangements to phase out products and processes that require a Tier I License. This is intended to ensure a smooth service transition for their customers and to mitigate any disruption to financial sector stability,” the notice ends.
On top of that, the institutions are adequately capitalized and meet the minimum capital requirements for a tier II license. The BoU further reassured the public that it remains committed to ensuring the stability of the financial system.
In 2022, the Finance Minister, Matia Kasaija announced that they had rolled new capital requirements which had to be fulfilled by all commercial banks. These banks were required to increase their capital buffers from Ugx25b to Ugx120b by June 2022 and from to Shs 150b by June 2024.
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This revision of the minimum capital requirement instrument was announced in June 2022 and took effect in December the same year. Therefore, all commercial banks in Uganda and other financial institutions have until June 30 to fulfill this capital bands requirement. It’s aim is to build and strengthen commercial banks liquidity buffets and also promote resilience against shocks.
