Tanzania’s Azania Bank Ltd capital has reached Azania Bank Ltd capital hits USD 78.8 million after raising some USD 36.6 million.
This comes in the wake of its acquisition of Bank M that went under late last year when the Central Bank of Tanzania was forced to take over its administration citing what it described as ‘serious liquidity problems.’
On March 15th the acquisition deal was signed and Bank M’s assets, liabilities, staff and customers were transferred to Azania Bank Limited.
The takeover has considerably increased Azania Bank Ltd status and capital bringing to the elite of ‘big five’ banks in the country.
BoT’s Deputy Governor Mr. Bernard Kibesse, told press that following the acquisition, Azania Bank Limited, has now become one of the five largest banks in Tanzania.
The decision to acquire Bank M was reached in Azania’s last general meeting with shareholders unanimously agreeing to capitalize and make the takeover move done under the Operation Law.
About Azania Bank Ltd
With an all Tanzanian ownership, Azania Bank Limited is considered the first indigenous private bank in the country. It was formed in 1995 and was formerly known as 1st Adili Bancorp Limited.
The major shareholders of the Bank include National Social Security Fund (NSSF) 35.27%, Parastatal Public Servant Service Fund (PSSSF) 62%, East African Development Bank (EADB) 1.54% and several indigenous Minority Shareholders including staff holding 1% of the shares.
Azania Bank Ltd operates across the country with 19 locations in various regions around Tanzania. Of these 14 are full-fledged branches while 5 are agencies.
Azania Bank Ltd assets have a net worth of USD 204.33 million and it has racked up impressive customer deposits amounting to just over USD 128 million. However, with the acquisition of Bank M, the total assets’ value shot up to USD582 million and the bank’s shareholders equity hit USD71.46 million.
It has several individual shareholders but is majority owned by the country’s pension funds with Parastatal Public Servant Service Fund (PPSSF) owning the larger share (62 %) the National Social Security Fund owns 35.27 % while the East African Development Bank 1.54 percent.
The bank employs some 360 staff of these been an additional 166 who have been transferred from Bank M in the wake of the acquisition.
Troubled Waters: The Fall of Bank M
As of August last year, Bank M was reportedly not able to keep the required minimum reserve of USD 21.9 million and was not able to honour its debts. BoT stepped in and said Bank M’s liquidity or lack thereof ‘…is detrimental to the interests of depositors and poses a system risk to the stability of the financial system’ local media quoted.
To protect the interest of stakeholders the BoT took over administration of the bank and has now handed it over to Azania Bank Ltd. He said the minimum capital requirement for commercial banks in Tanzania is 15 billion shillings.
He said at the time the BoT intervened last year, Bank M, with an asset base of USD 434.33 million was no longer able honor its financial obligations placing stakeholders at risk.
Over the past year, at least 6 banks lost their licenses owing to under capitalization and now Bank M has joined that list. Others are Kagera Farmers’ Cooperative Bank Covenant Bank, Njombe Community Bank, Meru Community Bank and Efatha Bank,
Across the Border: Affiliate Not Tainted
Bank M acquired stakes in Kenya (2016) where it owns 51% of M Oriental Bank formally Oriental Commercial. It is the first Tanzanian bank to venture into the Kenyan market.
M Oriental maintains that it is not affected by the collapse of its Tanzanian majority owner. It continues to operate to date.
The bank was placed under receivership back in 2001 and only reopened in 2016 at which point, its Chairman Shanti V Shah said they are ‘…the only bank in the past few decades that went into receivership, recovered well and is posting profits.’
At the same time, Chief Executive of Bank M Holdings Group Mr. Sanjeev Kumar said their focus would be on large family businesses.