Shareholders of troubled Tropical Bank Ltd have injected Shs 3.8 billion to save the bank from closure.
This is part of the conditions that Bank of Uganda gave the undercapitalized commercial bank under the Financial Institutions Act.
In a statement, the Central Bank said that under Section 86 of the 2004 Financial Institutions Act, Tropical Bank was asked to submit a capital restoration plan which among others required an injection of Shs 3.8 billion to keep the bank afloat.
Bank of Uganda said that the implementation of the capital restoration plan is still an ongoing exercise which will last for six months but emphasized that the bank is now financially sound.
“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,” a statement signed by Adam Mugume reads in part.
According to its 2019 financial results that were published on May 1, 2020, Tropical Bank’s losses had increased by 134 percent which caused a Shs 25 billion loss that eroded the bank’s core capital position.
The Libyan government holds the biggest stake in the bank with 99.7 percent shareholding while the government of Uganda through the Ministry of Finance, Planning and Economic Development holds 0.3 percent shares.