Uganda Regulator Hands Relief to Kenyan Lenders

The Bank of Uganda has said foreign-based commercial banks do not need its approval to lend funds originating abroad, bringing relief to Kenyan banks that had been rattled by a court ruling last week that declared some syndicated loans illegal. According to the bank, it does not regulate lending that involved using funds obtained from foreign banks that do not take deposits from the public in Uganda. Foreign banks lending deposits held in jurisdictions other than Uganda are regulated and supervised by their home authorities. It is not mandatory for a foreign bank to establish a representative office in Uganda in order to conduct lending, according to the statement by BoU.Last week Uganda's Commercial Division Judge Justice Henry Peter Adoyo fuelled uncertainty in the regional syndicated loan market after ruling that Kenya's Diamond Trust Bank (DTB), together with its Ugandan subsidiary, DTB Uganda, acted illegally by jointly lending money to Ham Enterprises Ltd and Kiggs International (U) Ltd owned by Ugandan businessman Hamis Kiggundu.