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Friday, 3 August 2018

BOT APPROVES ANOTHER MERGER, TAKES OVER BANK M MANAGEMENT

The Bank of Tanzania (BoT) has authorised the merger of Tanzania Women’s Bank (TWB) and TPB Bank Plc and has taken over management of Bank M due to critical liquidity problems.

The Central Bank Governor, Prof Florens Luoga, told reporters in Dar es Salaam yesterday that the move was part of government’s measure to improve and restructure Stateowned banks, in order to increase their efficiency and contribution to economic growth.

“It is from this backdrop that shareholders of TWB and TPB Plc decided to merge the financial institutions, to increase efficiency and performance of the banks,” he said, adding that BoT would like to assure the public that it will continue to protect the interests of depositors and maintain the stability of the banking sector.

The TWB and TPB Bank merger comes less than three months after the Central Bank approved the merger of Twiga Bancorp and TPB Bank PLC in May, as part of a plan to improve financial stability and reduce the number of State-run lenders.

We exclusively wrote in May that the ailing TWB was the next in line for merger, as part of government measures to consolidate its struggling banks to create a few big and strong lenders.

Prof Luoga said the merger came after the regulator had extended six months of surveillance period from January thisyear to three banks with the aim to bolster capital liquidity, to ensure they adhere to Banking and Financial Institutions Act, 2006.

“After six months, the three banks namely TWB, Tandahimba Community Bank (TaCoBa) and Kilimanjaro Cooperative Bank Limited (KCBL) were given one month to July 31, to ensure the conditions are met,” he said.

During the period, two of the banks, TACOBA and KCBL managed to meet the conditions of bolstering their capital liquidity and TWB merged with TPB Plc, he said. Under special arrangement, TACOBA got capital bolstering from CRDB bank to over 3bn/- to increase its capital, while KCBL released some of its assets.

Apart from the merge, Prof Luoga said TPB Plc was adequately capitalised as required by Section 17 of the Banking and Financial Institutions Act, 2006. This measure has been taken to improve the oversight and performance of banks owned by the Government of the United Republic of Tanzania.

TPB formerly known as Tanzania Postal Bank was founded in 1925 under British Rule, to later become a Savings Bank under the then East African Post and Telecommunications, which ceased to operate after the collapse of the East African Community.

On Bank M, Prof Luoga said, the mid-sized lender was put under statutory management after it was discovered that it had critical liquidity problems and was unable to meet its maturing obligations. “The current situation of Bank M was detrimental to the interests of the depositors, posing high risks to the financial sector stability,” he said.

The regulator has appointed a Statutory Manager to manage the affairs of Bank M and suspend its Board of Directors and Management. Bank M will then remain closed to carry any businesses for up to 90 days, the period for which the regulator will be taking appropriate measures.


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