Dar es Salaam. TPB Bank Plc officially joined the elite group of first-tier banks yesterday when its assets crossed the Sh1 trillion mark, following its acquisition of assets and liabilities of the TIB Corporate Bank.
The government officially announced in Dodoma that TPB Plc was officially acquiring all assets and liabilities of the TIB Corporate Bank effective yesterday.
This is in a deliberate bid to improve performance of public institutions.
“The government has continued to take various measures aimed at improving performance of public institutions, including merging institutions with similar roles, in order to increase efficiency and reduce operational costs,”
Treasury Registrar Athumani Mbuttuka told journalists in Dodoma yesterday.
The merger brings TPB Plc’s total assets to Sh1.002 trillion. Until March 31, 2020, TPB Bank Plc had assets worth Sh657.567 billion.
This was mainly in the forms of loans, advances and overdrafts which accounted for Sh435.8 billion or 66.275 percent of the bank’s total assets.
The bank had Sh449.393 billion in deposits from customers, having grown from Sh436.444 billion on December 31, 2019 thus portraying customer confidence in it.
During the first quarter of 2020, TPB Plc registered a net profit of Sh4.694 billion.
With only 5.56 percentration of Non-Performing Loans (NPLs) to total gross loans, TPB Plc had one of the lowest ratios of bad loans in the market.
On the other hand, TIB Corporate Bank had Sh344.913 billion in total assets as of March 31, 2020.Loans, advances and overdrafts accounted for Sh160.988 billion or 46.67 percent of total assets.
It held Sh238.4 billion in customers’ deposits as of March 31, 2020.But the TPB Plc management will have to contend with high levels of NPLs of the acquired firm.
With NPLs to total gross loans ratio of 38 percent, TIB Corporate had one of the highest levels of non-performing loans in the market.
It registered a modest net profit of Sh41 million in the first quarter of 2020.
The merger comes in just about ten months since the Bank of Tanzania removed the chief executive for TIB Corporate Bank, citing poor performance of the financial institution.
TIB Corporate was in urgent need of recapitalization and immediate measures to contain its high NPL levels which had been largely inherited from the then Tanzania Investment Bank.
Mbuttukwa assured customers of the two banks yesterday that they would continue to be served at their respective branches until further notice.
“The government would like to assure the customers of both banks and the general public that banking services will not be affected in any way due these changes,” said Mbuttuka.
Mbuttuka said the government’s decision aimed at enhancing performance of its banks by having strong, financially sound, and sustainable financial institutions that were capable of effectively and efficiently serving all customers.
“In addition, the merger aims at bringing about major reforms in systems, structures and corporate image with a view of enhancing competitive edge amongst commercial banks in the market,” said Mbuttuka.
This is the third time that TPB Plc is acquiring another state-owned financial entity.
In August 2018, TPB - formerly known as Tanzania Post Bank merged with Twiga Bancorp, another of the government owned bank that was struggling to remain afloat.
Almost two months later, Tanzania Women’s Bank (TWB) was seen as unsustainable in its then situation, prompting the government to merge it with TPB Bank Plc.
Twiga Bancorp which was put under Statutory Management of BoT on October 28, 2016, merged with TPB Plc in June 2018. Both TWB and Twiga Bancorp were suffering serious under-capitalization.
TPB Plc is now joining the group of ten other lenders which have assets of over Sh1 trillion each.
Others include: CRDB Bank, NMB Bank, National Bank of Commerce (NBC), Stanbic Bank, Standard Chartered, Absa, Diamond Trust Bank, Exim Bank, Azania Bank and Citi Bank.