The Bank of Uganda has taken action to place Mercantile Credit Bank Limited under liquidation, revoked its license, and ordered the winding up of its affairs due to issues such as under-capitalization, poor corporate governance, and insolvency.

In a statement released by the Deputy Governor of the Bank of Uganda, Michael Atingi-Ego, in exercise of its powers under sections 99 and 17(b) and (f) of the Financial Institutions Act 2004, (as amended), the Bank of Uganda, effective June 18, 2024, placed Mercantile Credit Bank Limited under liquidation, revoked its license, and made an order for the winding up of its affairs.

“This action is necessary because BOU has determined that the continuation of Mercantile Credit Bank Limited’s activities is detrimental to the interests of its depositors due to poor corporate governance and insolvency,” the statement read in part.

The statement further noted that BOU and the Deposit Fund of Uganda will shortly inform all depositors of the arrangements that will be put in place to enable them to access the insured portion of their deposits, and the uninsured portion of depositors will be handled in accordance with Section 105 of the Financial Institutions Act 2004, as amended.

“All creditors are requested to submit their claims to the office of the Director, Financial Stability, and Bank of Uganda within 30 days from the date the statement was issued, and any person possessing property of Mercantile Credit Bank Limited should deliver it to the director, Finance and Stability, Bank of Uganda,” Atingi-Ego noted.

Mercantile is the second financial institution to be closed this year by the Bank of Uganda following the closure of EFC Uganda Limited in January 2024, which was closed for similar reasons of poor corporate governance.