What Exim Bank buyout of FNB key assets means

Friday January 14 2022
Exim pic
By Samuel Kamndaya

Dar es Salaam. Exim Bank Tanzania is acquiring some assets and liabilities of First National Bank (FNB) Tanzania Limited in a move that could boost the lenders’ financial performance.

Exim Bank Tanzania signed the offer to acquire certain assets and liabilities of FNB Tanzania on October 26, 2021, paving the way for regulators to start scrutinising the deal, the Fair Competition Commission (FCC) announced in a statement that was posted on its website on January 10, 2022.

“On 26th October, 2021, the acquiring firm signed the offer for acquisition of assets and liabilities whereby the acquiring firm expressed its intention to acquire certain assets and liabilities of the target firm,” the statement reads in part.

Though the value of assets and liabilities to be acquired in the deal could not be immediately made public, records show that FNB’s assets stood at Sh163.7 billion at the end of September last year. Its total liabilities stood at Sh115.459 billion during the same period.

Banks mostly use customer deposits in their lending obligations. Until September 30, 2021, FNB held a total of Sh87.7 billion in customer deposits. It had, however, availed a total of Sh71.7 billion in loans, advances and overdrafts until the same period. This means that its loan-to-deposit ratio (LDR) stood at close to 80 percent.

FNB’s total cumulative loss grew to Sh12.9 billion during the period to September 2021, up from Sh10.8 billion during a similar period the preceding year.

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On the other hand, Exim Bank is a first-tier lender that boasts of a total of Sh2 trillion in asset size at group level until the end of September 2021. At group level, its total liabilities stood at Sh1.8 trillion until the same period.

Exim Bank Group held a total of Sh1.5 trillion in customer deposits as of September 30, 2021 while its loans, advances and overdrafts stood at Sh1.09 trillion during the same period.

It went home with a cumulative net profit of Sh11.3 billion during the period to September 2021.

In line with fair competition rules, the FCC is now investigating the intended acquisition with a view to examining the likelihood or otherwise of it [the merger] to harm competition.

“Pursuant to Rule 49 read together with Rule 41(6) of the Competition Rules, 2018, parties, both legal and natural (Petitioners) who deem themselves as having sufficient interest in this merger, or, if the merger is not objected to, it will have or is likely to have a material effect on their interests, are invited to submit their interests, objections or information (Petition),” FCC says.

The petitioners must submit their petitions to FCC within 14 days from the first day of publication of the notice.