KAMPALA – Shareholders of Tropical Bank Limited (TBL) have injected an additional Shs3.8b to save the struggling financial institution from liquidation over undercapitalization.
The published Audited Annual Financial Statements of Tropical Bank Limited (TBL) as at December 31, 2019 indicated undercapitalization to the tune of UGX 3.8 billion.
But BoU acting Deputy Governor Dr Adam Mugume on Tuesday, May 5, indicated that the shareholders have since moved to save the bank.
Prior to the publication of TBL’s audited Financial Statements, Dr Mugume said Bank of Uganda had, in accordance with Section 86 of FIA 2004, directed the Management of TBL to submit a Capital Restoration Plan.
“This directive was complied with before the end of March 2020, and during this time, the shareholders injected additional capital amounting to UGX 3.8 billion. The implementation of the submitted Capital Restoration Plan is on-going, and is in accordance with the timelines specified in Section 86 of the FIA 2004 which allow for up to 180 days for this process,” he said.
“As of today, TBL is well capitalised and Bank of Uganda reassures the general public that it will continue to protect depositors’ interests and maintain the stability of the financial sector,” Dr Mugume added.
The bankk first opened in the country in 1973 as Libyan Arab Uganda Bank .
Commercial banks are expected to have at least Shs 25 Bn as minimum capital. Tropical Bank made a loss of Shs 23.9 Bn in 2019 from 5.7 Bn in 2018.
According to KPMG, an audit firm that audited the bank’s accounts, Tropical bank’s situation points to the fact that “material uncertainty exists which cast significant doubt on Tropical Bank Limited’s ability to continue as a going concern”
A going concern is a business that is assumed will meet its financial obligations when they fall due.
The auditors added that “the COVID-19 outbreak affects the bank and results in certain uncertainties for the future financial position and performance of the bank. “
Tropical bank is 99% owned by Libya. The bank was in 2011 – at the height of the uprising that ousted former Libyan leader Muammar al-Gaddafi – handed over to Bank of Uganda after a resolution by the United Nations Security Council to declared a freeze on all Libyan assets in foreign territories.