Bank of Uganda has closed Mercantile Credit Bank Limited (MCB), a tier II financial institution, due to poor financial standing, marking the second closure of a financial institution by the regulator this year. In January, BOU closed EFC Uganda Limited, a microfinance company, due to similar reasons.
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.
“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.
“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 will do everything necessary to ensure a smooth resolution of this matter and protect the interests of all stakeholders,” he assured.
“The Deposit Protection Fund of Uganda (DPF) will work with us to inform depositors of the arrangements to access their insured deposits,” Atingi-Ego explained.
“The uninsured portion of the deposits will be handled in accordance with Section 105 of the Financial Institutions Act 2004, as amended,” he added.
“All creditors have 30 days to submit their claims to the Office of the Director, Financial Stability, Bank of Uganda,” Atingi-Ego said.
“Borrowers are directed to continue servicing their loans by making payments at Bank of Uganda offices and its branches as shall be advised,” he directed.
