Thursday, May 17, 2018

This is why Tanzanian state owned banks have merged

BoT deputy governor responsible for financial

BoT deputy governor responsible for financial stability, Dr Bernard Kibesse 

By Mnaku Mbani @mnaku28

Dar es Salaam. The Bank of Tanzania (BoT) has said the door is open for banks to merge or consolidate, thereby remaining with fewer banks that would improve efficiency in the banking sub-sector.

The BoT deputy governor responsible for financial stability, Dr Bernard Kibesse, said this on Wednesday when announcing the approval of a merger between TBP Bank Plc and Twiga Bancorp, the latter of which was under central bank supervision since October 2016.

Dr Kibesse said the government’s position was to remain with few banks – or even one government-owned bank – which would work efficiently and at reduced costs.

“The government’s direction is mainly that our President urges the need for a smaller number of banks, which would have a major impact on the economy,” he said.

“Government-owned banks must expect this move, as this is the direction we are heading in.”

Revealing that BoT would allow banks – even those privately-owned – to merge or consolidate their operations in order to have fewer and more efficient banks, Dr Kibesse said the central bank, which is the regulator of the banking industry, was closely monitoring the performance of existing banks.

Speaking on the merger between TPB Bank Plc and Twiga, the deputy governor said the deal has been approved with effect from today.

“In accordance with the mandate given to BoT by section 30 (a) of the Banking and Financial Institutions Act-2006, we have approved the merger,” Dr Kibesse said.

“We received a merger application from the government, who is the owner of the banks, and our analysis confirmed that the deal was effective.”

He said the merged banks would remain branded as TPB Bank Plc, and all operational issues of the henceforth defunct Twiga Bancorp would now be under TPB Bank Plc.

All customer deposits, employees, assets and debts of the defunct Twiga Bancorp have been consolidated to TPB Bank Plc.

“BoT will continue to protect the interests of depositors to ensure financial stability in the country – and ensure that no deposit s lost at Twiga,” Dr Kibesse said.

He added that TPB Bank Plc had sufficient capital in accordance with the country’s statutory requirements, and the merger was important for improving the efficiency of state-owned banks.

The deputy governor asked all depositors of the now-defunct Twiga Bancorp to remain calm, as the way forward would be announced by TPB Bank Plc.

A reliable source within the bank said the management was expected to convene a press conference today over the merger.

The government has an 86.03 per cent stake in TPB Bank Plc.

Another government institution, Tanzania Posts Corporation (TPC), holds 8.09 per cent shares, while the Zanzibar government has 3.05 per cent. TPC Savings and Credit Society owns 2.83 per cent of the shares. TPB Bank Plc’s original focus at its inception was to provide financial services to Tanzanians – including ready access to credit – even as it promoted financial inclusion and empowerment of Tanzanians by helping them to develop a saving culture, among other banking positives.