Dar es Salaam. Azania Bank shareholders have raised Sh120.5 billion in additional capital to boost liquidity following the approval of its acquisition of Bank M Tanzania Limited.
The amount brings Azania Bank’s total capital to Sh184.5 billion.
The Bank of Tanzania (BoT) authorised the merger of the two banks with effect from January 2, 2019 after Bank M went under.
Speaking in Dar es Salaam yesterday, Azania Bank managing director Charles Itembe said the lender acquired Bank M under what is termed as “acquisition by the operation of law”.
An acquisition by the operation of law refers to a manner in which an individual acquires certain rights or liabilities through no act or cooperation of his or her own, but merely by the application of the established legal rules to the particular transaction.
After Bank M was under the BoT’s statutory management for five months, the banking regulator finally announced on January 2, 2019 that the lender would be acquired by Azania Bank.
BoT then transferred Bank M’s total assets and liabilities, totaling about Sh800 billion, to Azania Bank.
“The decision to acquire the institution was made during the bank’s annual general meeting held last December where Azania Bank’s old and new shareholders unanimously agreed to recapitalise the bank to make it strong enough to acquire Bank M,” Mr Itembe said.
After the acquisition, he said, full integration of Azania Bank’s operations will be completed within 45 days from March 15, 2019 when the acquisition agreement was signed.
“We expect to open doors not later than May 2, 2019 when our clients and those who used to bank with Bank M will continue to receive our services across all of Azania Bank’s 19 branches as well as from the three branches that were being operated by Bank M,” he said.
Mr Itembe said Azania Bank had absorbed all 166 employees who were previously working with Bank M, bringing the total number of its staff to 360.
Azania Bank Limited was initially owned by the National Social Security Fund (NSSF), Public Service Social Security Fund (PSSSF), East African Development Bank (EADB) as well as the bank’s employees as minority shareholders. With the need to raise more capital, new shareholders came in the form of the National Health Insurance Fund (NHIF) and the Workers Compensation Fund (WCF).
The ownership structure currently stands at 51.95 per cent for the PSSSF, 27.99 per cent for NSSF, 17.42 per cent for NHIF, 1.79 per cent for WCF, while EADB and minority shareholders hold 0.51 per cent and 0.34 per cent stakes, respectively.
“The raised capital is meant to address liquidity challenges, support expansion plans and strengthen the bank’s ability to conduct big transactions,” said Mr Itembe.
The move, he added, would enable one to borrow up to Sh36 billion from the bank compared to the previous Sh12 billion ceiling.
“The acquisition, which will further heighten confidence in the banking system, and will also see Azania Bank assume Tier One status,” said Mr Itembe.
He reassured clients of Bank M on the safety of their money, saying it was in safe hands.