Tropical bank owners have injected in capital -BoU

Kampala, Uganda |  THE INDEPENDENT |  In a move to calm fears over the future of Tropical Bank Limited, Bank of Uganda has said its owners have injected in money and now the bank is well-capitalized.

In the audited accounts for 2019, it was revealed that the bank had been undercapitalized up to a tune of 3.8 billion Shillings. This means Tropical had only 21.2 billion Shillings of the 25 billion minimum capital required.

Tropical bank, which is owned majority by the Libyan government, made a 24 billion Shillings loss in 2019, the biggest loss in the banking industry in Uganda in recent times, further weakening its standing. KPMG, the auditors that looked at bank’s accounts, raised an alarm that this provided significant uncertainties that Tropical would continue operating as a going-concern.

Bank of Uganda said in a statement on Tuesday Morning said that the bank was asked to submit a capital restoration plan and its implementation is ongoing. So far, the owners have injected in cash of 3.8 billion Shillings to give it the required capital. This was done in March 2020, according to the Bank of Uganda.

“As of today, Tropical Bank Limited is well capitalised and Bank of Uganda reassures the general public that it will continue to protect depositors’ interests and maintain the stability of the financial sector,” the statement read.

Any news of a bank being undercapitalized can worry clients, with many likely to rush to withdraw their deposits or savings – leading to a run on a bank. This can lead to the bank’s collapse.

Tropical bank has been in Uganda since 1973. The bank was in 2011 – at the height of the uprising that ousted former Libyan leader Muammar al-Gaddafi – handed over to Bank of Uganda after a resolution by the United Nations Security Council declared a freeze on all Libyan assets in foreign territories.

The central bank handed it back to owners in 2012 when the fighting seemed to have ended. However, the financial institution has for some time now been struggling to make money in the market.

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