Banking in Uganda - Growing Pains

Growing Pains

In the late 1990s and early 2000s, the Ugandan banking industry underwent significant restructuring. Several indigenous commercial banks were declared insolvent, taken over by the central bank and eventually sold or liquidated. These included Uganda Cooperative Bank, Greenland Bank, International Credit Bank, Teefe Bank and Gold Trust Bank, which were closed or sold. Uganda Commercial Bank was initially privatized through a sale of its majority shares to a purported company from Malaysia. However it later came to light that the actual buyer was a partnership between Greenland Bank, which was insolvent at the time, and some politically connected individuals. A second privatization sale was conducted, with the Standard Bank of South Africa emerging as the winner.

The privatized Uganda Commercial Bank was merged with the former Grindlays Bank which Standard Bank already owned and had renamed Stanbic Bank. The combined new bank is now known as Stanbic Bank (Uganda) Limited. As of 2008, Stanbic Bank (Uganda) Limited was the dominant commercial bank in Uganda, with about 27% of all bank assets and about 20% of all bank branches. Nile Bank Limited, an indigenous institution, was acquired by the British conglomerate, Barclays Plc, in January 2007 and merged with its existing Ugandan operations to form the current Barclays Bank (Uganda).

A moratorium on new commercial bank licences was declared in 2004, with the passage of a new banking bill in Parliament, which established new banking institution classification guidelines. There are four classes of lending financial institutions under the new regulations as outlined below.