Finance Trust Bank to surrender commercial license for Tier II status

Finance Trust Bank has applied to surrender its Tier I commercial license in favor of Tier II status effective April 1. The move follows a Bank of Uganda notice as the lender shifts its strategy to meet revised capital requirements while maintaining core credit and deposit services.

KAMPALA, Uganda — Finance Trust Bank has officially applied to surrender its commercial banking license in favor of a Tier II credit institution status, joining a growing list of lenders retreating from the top-tier category due to steep capital requirements.

The Bank of Uganda confirmed the development in a public notice on Jan. 29, 2026, noting that the transition is scheduled to take effect April 1, 2026. The central bank has granted the institution a three-month transition period to align its operations with the new regulatory framework.

Capital Thresholds Force Strategic Shift

The decision is primarily driven by the inability to meet the revised minimum paid-up capital requirements mandated by the Ministry of Finance and the Bank of Uganda. Under the current regulations, Tier I commercial banks are required to maintain a minimum capital of 150 billion Ugandan shillings (approximately $40.3 million).

Finance Trust Bank, which originally transitioned from a microfinance deposit-taking institution to a commercial bank in 2013, has found the 150 billion shilling threshold an uphill task. By moving to Tier II, the bank’s capital requirement drops significantly to 25 billion shillings, allowing it to maintain its core business of lending and deposit-taking without the heavy burden of Tier I compliance.

Broader Industry Trend

The downgrade is not an isolated incident. Finance Trust Bank follows in the footsteps of other lenders, such as Guaranty Trust Bank (GTBank) and ABC Capital Bank, which previously opted for Tier II status to “play to their core strengths” in retail and SME banking.

Market analysts suggest that while a Tier I license offers prestige and the ability to handle larger corporate transactions and foreign exchange products, the cost of maintaining that status is becoming prohibitive for mid-sized players.

Impact on Depositors

Bank of Uganda officials have reassured the public that the transition will be seamless. As a Tier II credit institution, Finance Trust Bank will continue to take deposits and provide credit services, though it will be restricted from offering certain high-end commercial products like checking accounts or engaging in complex foreign exchange trading.

Management at Finance Trust Bank stated that the shift allows the institution to refocus on its historical mission of financial inclusion, particularly its long-standing commitment to serving women entrepreneurs and small businesses.