Ugandan banks caught between government and virus

Bank of Uganda headquarters in Kampala. Sources say there has been a slowdown in payments in the two months the country has been under lockdown. FILE PHOTO | NMG 

In Summary

• The Capital Markets Authority, which regulates listed companies, has advised against dividend pay outs and the central bank and the president have warned against foreclosures on defaulting borrowers when the economy is under lockdown.

By BERNARD BUSUULWA
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Uganda’s bank executives were on Thursday locked in virtual meetings discussing the future of the industry caught between the economic pressure caused by Covid-19 and from government regulators not to take action against defaulting borrowers.

The Capital Markets Authority, which regulates listed companies, has advised against dividend pay outs and the central bank and the president have warned against foreclosures on defaulting borrowers when the economy is under lockdown.

Sources say there has been a slowdown in payments in the two months the country has been under lockdown.

“Clients are unique, though the current macro-economic challenges are the same across the world. Most are facing cash flow challenges, but they are not the same in terms of scope,” said Charles Katongole, head of Treasury at Standard Chartered Bank Uganda.

“Despite the heavy economic shocks caused by Covid-19, we are ready to support our clients , downsize our risk appetite and preserve our bottom line,” he said.

“The new credit provisioning reports for April are expected to be released before end of May and this will help determine if we still have sufficient capital on our books and decide on the issue of paying dividends later this year.”

An executive at Citi bank who preferred to speak off the record said, “We haven’t received any loan restructuring requests from our clients, but other commercial banks have received lots of them. The big challenge is filtering genuine requests from dubious ones.”