Mercantile Credit Bank Closure and Depositor Payments

The Mercantile Credit Bank closure had a significant impact on depositors. In 1991, the bank was closed by the Bank of England, leaving thousands of depositors with uncertain futures.

Depositors were initially left in the dark about what would happen to their savings. It wasn't until a few months later that the government announced a plan to pay out 75% of depositors' savings, up to a maximum of £10,000.

This payout plan was a relief to many depositors, but it left some with significant financial losses. Those with larger savings were particularly affected, as they received only a proportionate share of the maximum payout.

Depositors were also entitled to claim compensation from the Deposit Protection Board, which was established to provide protection for depositors in the event of a bank failure.

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MCB was registered as a Merchant Bank in 1981 and commenced operations in 1986.

The bank's license allowed it to provide a range of services, including customer savings and fixed deposit accounts, credit facilities, fund transfers, and foreign exchange trading.

In 2004, the financial Institutions Act led to MCB being categorized as a Tier II Institution, giving it more flexibility in its operations.

MCB was required to adhere to the terms of its license, which it ultimately failed to do.

Mercantile Credit Bank's operations are built around efficiency and customer satisfaction. The bank's extensive network of branches and ATMs allows customers to access their services easily.

The bank's operating hours are designed to accommodate busy schedules, with many branches open from 9 am to 5 pm, Monday to Friday. This flexibility helps customers manage their finances on their own terms.

Mercantile Credit Bank's online banking platform provides a secure and convenient way for customers to manage their accounts, make payments, and transfer funds.

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MCB's branch network is supported by its Agency Banking model and partnerships with top-tier financial institutions. This allows for a wider reach and more convenient banking services for customers.

In Kampala's central business district, MCB maintains its branch headquarters at Plot 8 Old Port Bell Road. This strategic location enables easy access to banking services for both locals and visitors.

The institution has partnerships with several banks, including Absa Bank Uganda Limited, Bank of Africa Uganda Limited, and Standard Chartered Uganda, among others. These partnerships enhance the overall banking experience for customers.

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Some of the notable banks in the Kampala District include Bank of Uganda, ABC Bank (Uganda), and Centenary Bank. These banks offer a range of financial services, including savings, loans, and investment options.

Here's a list of some of the banks operating in Kampala District:

The Deposit Protection Fund of Uganda has commenced payment to depositors of Mercantile Credit Bank Limited (in liquidation).

2,850 depositors were left affected by the bank's liquidation on June 18, 2024.

The government, through the DPF, is paying out Shs 1.39 billion to protected depositors and Shs 1.64 billion to partially protected depositors.

Payments are being made through Mobile Money, but the name on the national identity card must match the name registered against the mobile money number.

The DPF is handling payments for deposits below the protected limit of Shs 10 million, while the Bank of Uganda will handle payments for deposits above this limit.

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Individual account holders with balances between Shs 1 million and Shs 10 million will receive their payments through Stanbic Bank on July 1, 2024.

Company, joint, and trust account holders will receive their payments on July 8, 2024, after presenting relevant documents to the DPF offices.

The DPF has assured depositors that money is available for payments and that they will be paid as long as there is an accurate record.

The Bank of Uganda revoked the license of Mercantile Credit Bank Ltd, ordering it to wind up its affairs. This was due to poor governance and failure to meet required capitalization levels, putting customer deposits at risk.

The Bank of Uganda took this action under Sections 99 and 17(b) and (f) of the Financial Institutions Act 2004. The decision was necessary to protect the interests of depositors.

The Bank of Uganda and the Deposit Protection Fund will work together to inform all depositors of the arrangements to pay them back.

The government has started paying depositors of the closed Mercantile Credit bank. This move was made after the Bank of Uganda concluded that continuing the bank's activities would be detrimental to its depositors.

The Deposit Protection Fund of Uganda (DPF) has commenced payment of individual depositors with balances of Shs 1 million or less, through mobile money, on June 22. Payments will take into consideration all outstanding debts and any other obligations to the bank.

The DPF will handle deposits above the protected limit of Shs 10m, not the Bank of Uganda. Payment of individual account holders with between Shs 1m and Shs 10m will commence on July 1, 2024, through Stanbic bank.

To receive payment, these depositors must present a valid and original national identity card. Company, joint, and trust account holders will receive payment on July 8, 2024.

They will need to present relevant documents to the DPF offices at AHA Towers, including a letter confirming the account name, and names and signatures of account signatories, among others. Payments will be made less any outstanding loans or other obligations to the bank.

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BOU Closes Mercantile Credit Bank Ltd due to poor governance and failure to meet capitalization levels. The Bank of Uganda revoked the license of Mercantile Credit Bank Ltd and ordered the company to wind up its affairs.

The bank was a Tier II financial institution that accepted call and time deposits. Credit Institutions are described as “non-bank” financial institutions that engage in the acceptance of call and time deposits, repayable after a fixed period or after notice.

The Deputy Governor, Dr Michael Atingi-Ego, said the action was necessary because the bank's continuation was detrimental to its depositors. The institution's failure to resolve its significant undercapitalization, poor corporate governance, and insolvency put customer deposits at risk.

The Bank of Uganda will work together with the Deposit Protection Fund (DPF) to inform all depositors of the arrangements to pay them back. The DPF insures deposits up to 100,000 shillings, while the BoU will handle higher amounts.

All creditors are asked to submit their claims to the office of the Director, of Financial Stability at BoU within 30 days from the announcement. Borrowers are directed to pay their loan balances at BoU headquarters or branches.