Azania Bank Limited (ABL) Managing Director, Charles Itembe said in Dar es Salaam on March 20th while officially taking over the troubled bank under Bank of Tanzania directives that ABL clients will also start getting services from three Bank M branches starting in May.
The acquisition takes Azania into tier one group of elite commercial banks in the market further expanding its footprint from 19 to 22 branches while its capital base surges from Tshs.64 billion ($28 million) to Tshs.181 billion ($79 million) and its balance sheet crosses a trillion shillings mark from half a trillion.
The Central Bank announced that with effect from March 15th 2019, assets and liabilities of Bank M have been transferred to ABL after the two parties signed the transfer agreement. `This long awaited move will further heighten confidences in the banking system while pushing Azania Bank`s market share to tier one banks category. The acquisition is expected to result into better efficiency through improved processes, transformational incentives and will significantly increase our share of wallet,` said Itembe.
In August 2018, Bank of Tanzania placed Bank M under statutory management for failure to meet regulatory financial requirements following a sustained breach of liquidity requirement ratios. The acquisition was made possible following ABL`s expression of interest, conducting of due diligence and detailed proposal program with promises of continued engagement with shareholders.
ABL 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 National Health Insurance Fund (NHIF) and Workers` Compensation Fund (WCF). The ownership structure currently stands at 51.95 per cent for the PSSSF, 27.99 per cent for the NSSF, 17.42 per cent for the NHIF, 1.79 per cent for the WCF, while EADB and the minority shareholders hold 0.51 per cent and 0.34 per cent stakes respectively.
With raised capital from new shareholders, ABL expects to address liquidity challenges, support expansion plans and strengthen the bank`s ability to conduct big transactions enabling the bank to lend up to Tshs.36 billion ($16 million) from previous Tshs.12 billion ($5.3 million) ceiling. Last year, Azania Bank recorded a very impressive financial performance in terms of profitability and assets growth. The bank recorded a profit before tax of Tshs.8.2 billion ($3.5 million), a growth of 231 per cent compared to Tshs.2.5 billion ($1.08 million) in 2017.