Chiamaka Ihekwoaba

Chiamaka Ihekwoaba

Tanzanian lender Bank M’s assets, liabilities transferred to Azania Bank

All assets and liabilities of Tanzania’s Bank M have been transferred to Azenia Bank for failure to meet liquidity requirements.

This was made known by Bank of Tanzania’s deputy governor, Bernard Kibesse, “Central Bank has transferred the assets and liabilities of Bank M to Azania Bank, he stated.”

On August 2, 2018, the Bank of Tanzania, seized Bank M, dismissed its board of directors and senior managers and appointed an administrator. This placed Bank M under receivership pending when the lender fails to meet liquidity requirements. A decision on the way forward was to be realised within 90 days.

“Bank M failed to meet liquidity requirements and could not meet its maturing obligations, hence the decision by the central bank to put the bank under administration. After acquiring the assets and liabilities of Bank M, Azania Bank will now have a capital of 164 billion Tanzanian shillings ($71.46 million), which is way above the minimum capital requirement of 15 billion shillings,” Kibesse told a news conference.

Prior to the seizure of Bank M in August, the stock of the bank was owned by 14 individuals and corporate entities.

Commercial banks in Tanzania experienced various challenges in 2015 and 2016, especially liquidity, as borrowers failed to honour their obligations. This led to a lot of Non-Performing Loans (NPLs). In 2016, the NPLs-to-total-gross loans ratio reached an average of 9.5 percent, a 3.1 percent increase from the average of 6.4 percent in 2015.

In 2017, Tanzania’s President, John Magufuli ordered the central bank to tighten controls on the movement of hard currency and take swift action against failing banks in order to reduce financial crimes in the country. By December 2018, the central bank suspended five banks from trading in the interbank foreign exchange market for one month for breaching regulatory rules. That same month, the International Monetary Fund said nearly half of Tanzania’s 45 banks were vulnerable to adverse shocks and risk insolvency in the event of a global financial crisis.