The Bank of Tanzania (BoT) has taken over Bank M Tanzania Plc due to critical liquidity concerns and the lender’s inability to meet maturing obligations.
“Continuation of the bank’s operations in the current liquidity condition is detrimental to the interests of depositors and poses systemic risk to the stability of the financial system,” a statement by the Tanzanian central bank said on Thursday.
The regulator has also suspended Bank M’s management and board of directors, and has appointed a Statutory Manager for the bank. Pending the determination of an appropriate resolution, Bank M will not open for normal business for up to 90 days.
The Tanzanian central bank’s action will not only affect Bank M’s customers in the East African country, the impact will be felt in Kenya where Bank M holds a 51 percent stake in commercial bank M-Oriental.
The bank focuses on providing banking services to high net-worth individuals and family businesses. When it launched in Kenya, it ran with the same model, stressing that it was a sure way to grow its loan book and balance sheet.
“We will not be offering ATM services,” said M Holdings Group chief executive officer Sanjeev Kumarin 2016 when a new identity was unveiled for M-Oriental (formerly Oriental Commercial Bank in Nairobi).
Bank M is privately held by more than 10 shareholders, including Vimal Mehta with the largest stake of 16 percent. Mehta is the chairman of Negus group of companies, which formally held the largest shares in Serengeti Breweries.