Azania Bank Reassures its Clients after acquisition of Bank M

Thursday March 21 2019

 

By Seif Kabelele

Dar es Salaam. Azania Bank on Wednesday, March 20th reassured its clients of continued quality services and extending its product range that they have been accustomed to provide over the years.

The bank’s managing director Mr. Charles Jackson Itembe made the assurance statement in Dar es Salaam at a press conference after the Central Bank of Tanzania (BoT) announced that from 15th March, 2019 BOT has officially transferred BANK M’s assets and liabilities to Azania Bank Limited. The Central Bank of Tanzania and Azania Bank Limited have signed Transfer Agreement to that effect.

“This long awaited move which will further heighten confidences to the banking system while also pushing Azania Bank’s market share into tier one bank. The acquisition is expected to result into greater efficiencies through improved processes, cultural integration, transformational incentives and will significantly increase our share of wallet,” said Mr. Itembe.

In August 2018, Bank of Tanzania placed Bank M under Statutory Management for failure to meet its financial requirements by law and sustained breach of liquidity regulatory ratios

The acquisition was made possible following Azania Bank’s expression of interest, conducting Due Diligence and detailed proposal program to acquire bank M, thereafter continued engagement with shareholders and lengthy discussions with BOT extending to several months. Azania Bank through its existing shareholders PSSSF (51.95%), NSSF (27.99%), EADB (0.51%), Minority (0.34%) and new shareholders (National Health Insurance Fund (17.42%) and Workers Compensation Fund (1.79%)) finally reached consensus to re-capitalize Azania Bank to acquire Bank M and subsequently continue to support the bank for smooth take over, the move that will not only save depositors funds but also heighten market confidences in the banking sub-sector.

Mr. Itembe said the modality of this acquisition of the Bank is that what is called “acquisition by the operation of Law”

“We felt this property was essential to ABL’s operations. The full integration of the two banks is set to be completed in the 45 days from the day we signed the Acquisition Agreement with BOT (Signed last week Friday 15th march 2019). We expect to open doors not more than 2nd May, 2019 from which our clients and the then Bank M clients will continue to receive high quality services across all Azania Bank Network and all branches previously owned by Bank M,” he said.

The decision to acquire the institution materialized during ABL extraordinary Annual General Meeting held in 21st December, 2018 where shareholders agreed to re-capitalize Azania Bank and also invite new shareholders who also agreed to inject capital into the Azania bank to make it strong enough to acquire bank M. This acquisition makes Azania further expand its footprint from 19 to 22 branches. Its capital base also increases from TZS 64 billion into TZS 181 billion while its balance sheet size crosses a trillion plus from half a trillion.

“Within these 45 since 15 days we expect to complete full integration of systems and migration of financial DATA, review of processes, staff need assessment and complete all contractual matters after which all BANK M clients will continue to be served at any branch of their choice across Tanzania. This move will subsequently lead to rebranding of Bank M existing branches namely Kisutu, Pugu and Arusha” following Mr. Itembe remarks.

According to Mr. Itembe the new development which now makes ABL a Tier One bank does not in any way change their strategic blue print rather improvement of operational models and review of benchmark and milestone targets but the bank remains embracing both retail and corporate services though with a big jump of its corporate book.

” As part of our operations, ABL will continue to implement its Five-year strategic plan which in the transition will be updated in line with the revised benchmark/targets following this acquisition. Our main focus is to ensure that all customers previously served by Bank M continue to enjoy even better services and beyond.”

The bank’s top official said they will also integrate cultures of ABL and Bank M staff as part of the initiatives to improve and increase efficiency levels in service provision and operations as we continue implementing our annual strategic expansion plan. In doing so, enabling Bank M staff to continue being in a job market to earn a living. Mr. Itembe, also made a remark that the operation will open soon following what he called a perfect match between the two IT system, we currently use Oracle Flex cube 12.4 (The latest version) while Bank M used to operate under Oracle Flex cube 12.03 hence no bigger efforts to migrate the DATA.

Nonetheless, Azania Bank Ltd. has pledged to continue with operational improvements; utilizing some of the latest Digital technologies in order to serve our corporate and retail clients better and seamlessly.

ABL Financial Performance for the Year 2018

Azania Bank recorded a very impressive financial performance in terms of profitability and assets growth for the year 2018 as compared to year 2017. During the year 2018 profit before tax of Azania bank was TZS 8.2 billion which is 231% increase as compared to TZS 2.5 billion recorded in year 2017 mainly due to increased investments on loans and advance which translated in increase in interest income from TZS 41.9 billion in year 2017 to TZS 50.1 billion recorded in year 2018.

In terms of balance sheet growth, total assets as at 31st December 2018 was TZS 504.0 billion showing an increase of 29% from TZS 390.0 billion recorded in year 2017. Loans and advances have grown by 57% to TZS 292.7 billion recorded in year 2018 from TZS 186.7 billion recorded in year 2017. Furthermore, there has been improvement in quality of loans which has led to decrease of non-performing loans to 6.2% from 12.3% recorded in year 2017.

During the year 2018 Azania bank continued with its strategy of improving financial services delivery where it opened two new branches one being Morogoro branch in Morogoro Region and the other one named Sokoine Branch opened in the Capital City of Dodoma.

Furthermore, Azania bank has implemented state of art core banking system in year 2018 which is the latest version re-known as Flexicube Oracle12.4 from Oracle Financial Services, this system is the state of the art technology in banking sector with enhanced core banking applications as well as Digital experience which gives Azania bank competitive advantage in banking business as well as in its Digital Transformation Journey to serving both Retail and Corporate Segments.