The Bank of Uganda (BOU) has announced the closure of Mercantile Credit Bank Limited (MCB), a Tier II financial institution, citing poor financial health. This is the second financial institution closure by the BOU this year, following the shutdown of EFC Uganda Limited, a microfinance company, in January for similar reasons.
Effective immediately, Mercantile Credit Bank, located on Old Portbell Rd, will undergo liquidation. The BOU has revoked MCB’s license and initiated the winding up of its affairs.
Deputy Governor of the Bank of Uganda, Michael Atingi-Ego, stated, “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.”
He emphasized that the closure is necessary to protect depositors and maintain financial stability. Atingi-Ego assured that the BOU and the Deposit Protection Fund of Uganda (DPF) will ensure a smooth resolution and safeguard stakeholders’ interests.
The DPF will inform depositors about accessing their insured deposits, while the uninsured portion will be handled per Section 105 of the Financial Institutions Act 2004, as amended. Creditors have 30 days to submit their claims to the Office of the Director, Financial Stability at the BOU. Borrowers are advised to continue loan payments at BOU offices and branches as directed.
The BOU’s actions reflect its commitment to enforcing regulations and ensuring the stability of Uganda’s financial system. Atingi-Ego urged all stakeholders to cooperate during this process.
Founded as a Merchant Bank in 1981 and starting operations in 1986, MCB was classified as a Tier II institution following the Financial Institutions Act of 2004. This classification allowed it to offer savings and fixed deposit accounts, credit facilities, fund transfers, and foreign exchange trading. As of December 2011, MCB’s total assets exceeded US$6.6 million, with shareholders’ equity at approximately US$1.6 million. By December 2012, total assets were estimated at US$9.9 million due to its operational growth.
