KAMPALA — Bank of Baroda in Uganda is mooting a plan to raise share capital to up to UGX 150B about ($40M).
The bank’s shareholders are expected to greenlight the development later this week during the annual general meeting, according to a memo seen by Kikubolane.
Anne Tumwesigye Mbonye, Bank of Baroda company secretary, in a notice to shareholders, said the lender has opted to float 15 million bonus shares in rights offer to raise the Ush150 million ($39,900) at a ratio of 1:5 ratio priced at $0.0026 each.
“NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting (EGM) of Bank of Baroda (Uganda) Limited (“the Company”) will be held at 11.00 AM on the 24th day of March 2023 online through an electronic platform to transact the following business… To consider and if deemed fit, increase the share capital of the Company from Shs. 25,000,000,000/- (Uganda Shillings Twenty Five Billion only) to Shs. 150,000,000,000/- (Uganda Shillings One Hundred and Fifty Billion only) by issuing bonus shares in the ratio of 1:5 to the existing shareholders,” Tumwesigye wrote in a memo to shareholders.
The move came just three months after Uganda’s Finance Minister Matia Kasaija signed a statutory instrument increasing minimum capital for banks by 500 percent, from $6.67 million to over $40 million.
The idea, according to the Bank of Uganda (BoU), is to prevent commercial banks from falling off the cliff when economic shocks hit their clients.
According to the new rules, regulated micro financiers’ paid-up capital also increased to $6.6 million from $267,636.
The new capital requirement has thrown a spanner in Uganda’s banking sector works.
The industry has reported one exit — Afriland First Bank last year after 16 months in the market.
The new rules follow trends in the region where some banks collapsed after reporting bad loans.