Uganda: Opportunity Bank Granted Commercial Bank License

Sep 2019
Uganda, September, 27 2019 - Opportunity Bank Uganda Limited has been granted a license to operate as a commercial bank by Bank of Uganda. This brings the number of commercial banks in the country to 25.

According to a Bank of Uganda letter dated September 25, Opportunity bank secured approval for commercial bank and it would transform from its current status of the credit institution. The approval is good news to the bank and its management who have been seeking this status for quite some time.

Opportunity bank’s executive director Tineyi Mawocha has previously said that “we have seen our clients progress from having little to more but end up being big and leaving us.”

He said this is one of the key reasons they needed to graduate to a commercial bank to serve bigger customers.

“The last thing we need is to nurture a client and then let them go to another [bank because we can no longer serve their needs,” he said earlier.

Also, the new status means the bank can now offer foreign currency services. Mawocha said they wanted to be part of a clearinghouse which they couldn’t do as a credit institution. The new status also means that Opportunity bank, with 23 branches countrywide, will have to up the money it deposits at BoU as minimum capital requirements from the current Shs 1 billion for tier II credit institutions to Shs 25 billion for a commercial bank.

It also brings more challenges, including heightened competition with banks with more money. It also means Opportunity bank will use tighter approval procedures for loans – it will henceforth reduce on lending to those with say land agreements as security and seek land titles.

For the year ended December 2017, Opportunity bank announced its assets had reached Shs 93bn. After-tax profits had grown by 60% to Shs 2.2bn that year. It was holding customer deposits of up to Shs 43bn.

In preparation for this status, the bank rebranded last year, changing its colours from red to black, white and blue, representing a rebirth of the brand, according to Mawocha. It also moved its office from posh Kololo to less elitist Kamwokya to identify more with its customers, management told reporters. 

Opportunity bank started in 1995 as Faulu Uganda owned by Food for the Hungry International (FHI). In 2006, it was acquired by Opportunity Transformation Investment Inc (OTI), a US-based microfinance investment vehicle, which owned 92 per cent of the Opportunity bank by the end of 2015.

In 2016, Mybuck, a Luxembourg-based financial and technology (Fintech) firm, bought 49 per cent stake in the institution as it thought to expand its African presence.  Its interest in the bank came handy as Opportunity bank sought to deepen its usage of digital products.

Source : The Observer

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