Finance Trust Bank will transition from a Tier I commercial bank to a Tier II credit institution effective April 1, 2026, following approval by the Bank of Uganda (BoU). The downgrade follows a strategic decision by the bank’s board and aligns with tighter capital requirements under Uganda’s Financial Institutions Act.
BoU Director of Communications, Kenneth Egesa, said the regulator has granted the bank a three-month transition period starting January 1, 2026, during which it will phase out products and operational processes that require a full commercial banking licence. The move reflects a broader regulatory push encouraging institutions to downgrade, merge, or consolidate in order to strengthen stability within the financial sector.
Under Uganda’s regulatory framework, Tier II credit institutions are licensed and supervised by the Bank of Uganda and are permitted to accept time and call deposits and extend credit. However, they are not allowed to operate cheque accounts or engage in foreign exchange trading. These institutions typically focus on small and medium-sized enterprises and retail customers.
Tier II institutions operate under a minimum capital requirement of UGX 25 billion, revised upward from UGX 10 billion in 2024. In contrast, amendments to the Financial Institutions Act in 2022 raised the minimum paid-up capital for commercial banks to UGX 150 billion from UGX 120 billion, a move aimed at strengthening sector resilience and preventing bank failures.
While the higher capital thresholds attracted criticism from some lawmakers and smaller banks, both the Bank of Uganda and the Ministry of Finance advised affected institutions to consider downgrading, mergers, or acquisitions where necessary. Several banks have already transitioned to Tier II status, including Pride Microfinance Bank, BRAC Uganda Bank Ltd, Yako Bank, Opportunity Bank, ABC Capital Bank, and Guaranty Trust Bank Uganda.
Egesa said the transition period is intended to ensure service continuity for customers and reduce risks to financial stability. He added that the change in status reflects Finance Trust Bank’s decision to reposition itself and focus more effectively on its core customer base, noting that the bank meets the minimum capital requirements for a Tier II credit institution.
Finance Trust Bank was established in 1984 as Uganda Women’s Finance Trust Limited, providing financial services to low-income populations, particularly women. It later operated as a Tier III microfinance deposit-taking institution before obtaining a full commercial banking licence in 2013 and rebranding as Finance Trust Bank. As of May 2024, the bank operated 35 branches nationwide.
In 2024, Nigeria’s Access Bank Group acquired more than 80 percent of the bank’s shares. The current shareholding structure includes Access Bank Group with an 80.89 percent stake, Uganda Women’s Trust with 12.89 percent, and minority shareholders holding 6.22 percent.
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