africa Banking Economy Government Legislation Tanzania

Tanzania’s central bank takes over administration of leading private bank

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The Bank of Tanzania (BoT) on Thursday took over the administration of Bank M Tanzania Plc, a fully fledged private commercial bank, after it faced serious liquidity problems.

BoT said in a statement that Bank M Tanzania Plc which was issued a license to undertake banking business in the east African nation in February 2007 was facing liquidity problems that were unfavorable to its clients.

The central bank statement said the decision to take over Bank M Tanzania Plc followed determination by the BoT that Bank M has critical liquidity problems and was unable to meet its maturing obligations.

“Continuation of the bank’s operations in the current liquidity condition is unfavorable to the interests of depositors and poses systematic risk to the stability of the financial system,” added the statement.

The statement said BoT has appointed a statutory manager to manage the affairs of Bank M Tanzania Plc and suspend its Board of Directors and Management.

“Further, Bank M will not open for normal business for up to 90 days during which the BoT will determine on the appropriate resolution option,” said the statement.

This is the second time this year that the BoT was taking serious measures against banks because of undercapitalization.

In January 2018, the BoT revoked the banking licenses of Covenant Bank, Efatha Bank, Njombe Community Bank, Kagera Farmers’ Cooperative Bank, and Meru Community Bank, due to undercapitalization.

The BoT had said the decision to revoke the licenses followed critical undercapitalized facing the banks which amounted to violation of the requirements of the Banking and Financial Institutions Act, 2006 and its regulation.

Source: Xinhuanet

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