Bank of Uganda Approves Finance Trust Bank’s Transition to a Credit Institution

The Bank of Uganda (BoU) has formally approved Finance Trust Bank’s application to change its licensing status from a Tier I commercial bank to a Tier II credit institution, a regulatory shift that will take effect on April 1, 2026.

The decision follows a strategic review by the bank’s board, which concluded that operating as a credit institution would better align Finance Trust Bank’s business model with its core customer segments and long‑term goals. BoU’s notice confirms the institution meets the capital requirements for Tier II licensing and remains adequately capitalised under the current regulatory framework.

To support an orderly transition, the central bank has granted a three‑month period from January 1 to March 31, 2026, during which Finance Trust Bank will gradually discontinue products and services that are exclusive to commercial banks. The phased approach is intended to protect customers and uphold stability within Uganda’s financial sector.

Context: Regulatory Changes and Sector Realignment

The move by Finance Trust Bank comes amid broader reforms introduced in 2022 when Uganda’s Ministry of Finance and Bank of Uganda raised the minimum capital requirement for commercial banks from UGX 25 billion to UGX 150 billion. The change was designed to strengthen resilience in the banking sector by ensuring institutions have deeper capital buffers against economic shocks.

Since the implementation of the higher thresholds, several other commercial banks have opted to scale down their operations. Finance Trust Bank is the fourth institution to make this transition; others include ABC Capital Bank, Guaranty Trust Bank (Uganda) and Opportunity Bank, all of which transitioned in 2024.

What This Means for Customers

During the transition period, Finance Trust Bank has assured its customers that services will continue uninterrupted across its branch network. The institution will remain operational and compliant with regulatory requirements throughout the process.

By shifting to a credit institution licence, Finance Trust Bank will focus on deposit taking and lending services accessible under Tier II regulations, while products requiring a Tier I licence, such as foreign exchange trading and certain transactional services, will be phased out.

This regulatory development signals a continued evolution within Uganda’s banking landscape, where capital adequacy and prudent risk management remain central to financial stability and growth.