Djibouti-based bank acquires Top Finance 

Salaam African Bank with headquarters in Djibouti has acquired Top Finance Bank. Photo | Courtesy 

What you need to know:

In a notice on Monday, Bank of Uganda noted that Salaam African Bank with headquarters in Djibouti had acquired Top Finance Bank, following conclusion of negotiations as provided under the Financial Institutions Act, 2004 

Bank of Uganda has said a Djibouti-based bank has completed the acquisition of Top Finance Bank.

In a notice on Monday, Bank of Uganda noted that Salaam African Bank with headquarters in Djibouti had acquired Top Finance Bank, following conclusion of negotiations as provided under the Financial Institutions Act, 2004. 

Top Finance Bank, a tier two credit institution, was founded in 2012 and later licensed by Bank of Uganda in 2014.

The bank will be the second major sector movement in less than three months following Afriland First Bank’s voluntarily exit in May, less than three years after it was licenced in 2019. 

Salaam African Bank, which was established in 2007 also has a presence in Ethiopia, through a representative office and in Kenya through Salaam Microfinance Bank and Salaam Investment Bank. 

The acquisition comes amid a number of challenges and regulatory requirements in banking, among which include a volatile and competitive market and an increase in licensing fees.  

In January Bank of Uganda increased all licensing fees for commercial banks, credit institutions and microfinance deposit-taking institutors. 

For instance, licensing fees for commercial banks were increased from Shs2m to Shs50m while that of credit institutions was increased from Shs2m to Shs30m. Microfinance deposit-taking institutors are now required to pay Shs20m for a license from Shs2m.  

Top Finance Bank has been struggling, in a market that is dominated by Pride Microfinance and Finca. 

As of 2021, Top Finance Bank had Shs11.6b in assets, having experienced a 14.7 percent drop from Shs13.6b due to a 36.5 percent drop in lending from Shs9.6b in 2020 to Shs6.1b in 2021.

However, during the period, deposits grew by 3.3 percent from Shs12.1b to Shs12.5b while losses reduced to Shs2.3b from Shs3.6b.

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