Depositors rush to withdraw their money as Afriland First Bank closes
KAMPALA– Depositors of Afriland First Bank Uganda Limited are running to its head office to salvage their money as well but also open new accounts with other commercial banks after the former became solvent on May 25, 2022.
Bank of Uganda [BoU] revealed the latest development yesterday in a public notice. “Bank of Uganda hereby informs the public that Afriland First Bank Uganda Limited is a solvent financial institution,” Michael Atingi-Ego, BoU Deputy Governor said.
Adding that: “Therefore, all depositors and other verified creditors shall be paid in full,” he said, urging depositors to visit the bank’s premises to withdraw their money.”
He also said all verified creditors of the now liquidated bank would be paid. “All other verified creditors shall be paid in full by the liquidator that has been appointed by the shareholders of Afriland First Bank Uganda Limited,” he added.
Atingi-Ego said Afriland First Bank Uganda Limited requested for voluntary liquidation, which was approved.
“Bank of Uganda, in exercise of its powers under Section 98 [1] of the Financial Institutions Act, 2004 [as amended], on Wednesday 25th May 2022, approved a request from Afriland First Bank Uganda Limited to apply to High Court for voluntary liquidation,” AtingI-Ego said.
Atingi-Ego said in a public notice that Afriland Bank Uganda Limited’s decision for voluntary liquidation was an outcome of a strategic business review by the shareholders-Afriland First Group.
According to the latest report on the most profitable banks in Uganda in 2021, Afriland First Bank Uganda Limited was the 20th on the list of 26 commercial banks.
The bank suffered losses as they increased by 45.11 percent to Shs 2.670 bln in 2021 from Shs 1.84bln in 2021.
Voluntary liquidation, financial experts say, is an insolvency process that occurs when the company’s members determine that the company is insolvent, or likely to become insolvent and can no longer satisfy its debts.
The voluntary liquidation of Afriland First Bank means Uganda is now left with 25 commercial banks in an industry dominated by foreign domiciled banks.
This different from the past where BoU was quizzed by parliament for closing some banks without following the laid down guidelines and process.
Shareholders of some of the banks like National Bank of Commerce, Crane Bank Limited, Global Trust Bank still maintain that they were unfairly closed on account of being undercapitalized.
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