ATM
Bank M
Bank M of Tanzania
Bank M Tanzania Plc
Bank of Tanzania
Bank of Tanzania that Bank M
BoT
Business Daily
CBK
Central Bank of Kenya
Delphis Bank Ltd
Group
Kenya
Kumar
M Holdings Group
M-Oriental
Nairobi
Oriental Commercial Bank
Sanjeev Kumar
Serengeti Breweries
Tanzania
Vimal Mehta

Regulator places Tanzanian bank that owns Kenya’s M-Oriental under administration

Tanzania’s banking regulator, the Bank of Tanzania (BoT), on Thursday placed Bank M Tanzania Plc under administration after it became insolvent.

The lender consequently will not open for normal business for up to ninety days effective Thursday “during which the Bank of Tanzania will determine an appropriate resolution option,” the regulator added.

The move is expected to affect the operations of the Kenyan small-sized lender M-Oriental, formerly Oriental Commercial Bank, where the Tanzanian lender owns a 51 per cent stake.

“The decision to take over the bank follows determination by the Bank of Tanzania that Bank M has critical liquidity problems and is unable to meet its maturing obligations,” BoT said in a statement.

“Continuation of the bank’s operations in the current liquidity condition is detrimental to the interests of depositors and poses systemic risk to the stability of the financial system.”

The Tanzanian regulator appointed a statutory manager to run affairs of the bank and suspended its board of directors and management.

Two years ago, Bank M of Tanzania, became the first Tanzanian lender to enter the Kenyan market after 73 per cent of its shareholders under the M Holdings Group agreed to buy 51 per cent stake in the former Oriental Commercial Bank.

This followed a decision by the Central Bank of Kenya (CBK) on June 22, 2016, clearing the acquisition of the stake by the Tanzanian lender, setting the stage for its entry into Kenya.

M Holdings Group chief executive officer Sanjeev Kumar at the time told the Business Daily that the lender would mostly focus on banking large family businesses in a bid to grow its loan book and balance sheet.

“We will not be offering ATM services,” said Mr Kumar on July 23 during the unveiling of the bank’s new identity in Nairobi.

Mr Kumar added then that M Oriental would seek to replicate its niche business model that had seen the Group’s Tanzanian unit attain success by restricting banking services to high net-worth individuals and family businesses.

“We have created Bank M as a strong wholesale bank in Tanzania and we aspire to transform M Oriental as the preferred bank for large family businesses in Kenya,” he had said.

Prior to acquisition, Oriental Commercial Bank was classified as a small lender by the CBK and was formerly Delphis Bank Ltd.

It had been licensed to operate in Kenya in 1991, and was ranked 37th in terms of market share as at 31 December 2015, with nine branches.

Bank M, ranked among the top 10 banks in Tanzania, is owned by 15 shareholders with Vimal Mehta as its largest shareholder with a 16 per cent share.

Mr Mehta is the chairman of Negus group of companies, which formerly held a controlling stake in Serengeti Breweries. Nine of its shareholders are listed as individuals with the rest as institutions.

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