Two more Banks face uncertainty over their future
The Uganda banking sector remains on tenterhooks with fears that two more banks face collapse, we can reveal. Cairo International Bank and UBA could have their management taken over by Bank of Uganda (BoU) according to the latest. Ever since Bank of Uganda took over Crane Bank, the financial sector in the country has been living in fear with hundreds of customers reportedly withdrew their money from their bank accounts.
Although Bank of Uganda Governor Tumusiime Mutebile today (Wednesday) dismissed reports of a troubled financial sector, he revealed that two banks are on the central bank’s ‘watch list’.
Sources said it’s not the only two banks struggling with capitalisation but also Eco Bank.
The development causing a bank run in Kampala was triggered by Central Bank’s takeover of Crane Bank on grounds of being undercapitalised.
UBA has not made profits in the last seven years with total assets plummeting to Shs165bn in 2015 from Shs185bn in 2014. It has equally closed branches in many parts of Kampala.
Experts say the causes of the failing banking sector could be more to do with the poor performance of the economy with growth averaging at less than 5 percent for the last ten years.
At the time of the takeover, Crane Bank was controlling 8.3 percent (Shs1.7tn) of the total industry assets of Shs21.4tn.
Bank of Uganda officials say the move was necessary to protect customers’ deposits.
However, this has triggered shock waves in the industry, risking collapse of the entire financial system in the country.