MWALIMU COMMERCIAL BANK TO WIN MANY HEARTS

March 18, 2015. Mwalimu Commercial Bank, which is in the process of formation, is expected to bring about stiff competition in the country's banking industry because of the huge number of employees in the teaching fraternity.

The bank, expected to float its initial public offer (IPO) next Monday, is a threat to mainstream banks as it will accumulate a lot of deposits from some 200,000 members' salaries.

Zan Securities Chief Executive Officer, Mr Raphael Masumbuko, said the teachers' union has many clients who once the bank becomes operational will channel their salaries through the bank.

Mr Masumbuko also noted: "teachers are good borrowers thus posing a huge challenge to mainstream banks." Tanzania has over 50 banks but some of the biggest are NMB, CRDB, Standard Chartered, Exim, National Bank of Commerce (NBC) and Barclays.

The Mwalimu Bank is scheduled to start in November with a capital of 25bn/-, which is well above the regulator's threshold of 15bn/-.

The bank is already having 17bn/-. The bank is expected to raise 25bn/- after selling 50 million shares for 500/- each. A subscriber is required to buy a minimum of 100 shares.

Mr Masumbuko said the bank went for full-fledged commercial bank showing seriousness attached behind the establishment of the bank in November.

"I think we might have a good IPO as the shares are not enough for teachers, let alone the entire public," Mr Masumbuko said.

Capital Market and Securities Authority (CMSA), Principal Public Relations Officer, Mr Charles Shirima, said the bank had the required capital but according to BoT regulation, a single holder is limited at 20 per cent share. "So they were told to dilute and reduce their share to 20 per cent.

The new structure is 20 per cent Tanzania Teachers Union (TTU) and the rest (80 per cent) would be sold to the public," Mr Shirima said.

The founding shareholders are TTU and Teachers' Development Company Limited (TDCL). Stock brokers have it that the IPO stage to be one of the best and might be oversubscribed given the background of TTU, the bank starting with above minimum core capital and buying shares through mobile infrastructure.

"This will be the first time that shares are sold through mobile phone services this will enable many to participate," Mr Juventus Simon, General Manager of Orbit said.

He said the TTU has also created a good platform for its members to participate in the IPO. This will push for more would-be-investors.

Though, the bank planned to open doors in November, shares are expected to be listed for trading in June at DSE's second market --Enterprises Growth Market (EGM).

The idea to establish TTU's bank started some three years ago.

Daily News