Tanzania: Another Bank Set to Join Tanzania's Elite League

Dar es Salaam — Another first-tier bank could be in the making in Tanzania if an agreement by KCB Bank and BancABC gets all the relevant regulatory approvals, The Citizen has learnt. BancABC is part of Atlas Mara.

Atlas Mara Limited, ABC Holding Limited and KCB Group Plc announce yesterday that they have signed a definitive agreement regarding a proposed acquisition of BancABC by KCB.

The acquisition would be followed by a subsequent merger with KCB Tanzania

"Once implemented, the combined bank is expected to strengthen its financial and regulatory ratios, resulting in a robust balance sheet and capital structure that will support business growth and ensure the banks' customer base benefits from being a part of one of the biggest banking groups in East Africa," the statement said yesterday.

The merger will create a banking outfit of about Sh1 trillion assets to ostensibly rank the new lender as one of Tanzania's 11 largest, first tier banks.

Tanzania is home to at least ten first-tier banks which boast assets of over Sh1 trillion each.

The banks (and their asset size in brackets) include: NMB Bank Plc (Sh7.01 trillion), CRDB Bank Plc (Sh6.55 trillion), NBC (Sh1.9 trillion), Citibank (Sh1.74 trillion), Stanbic (Sh1.7 trillion), Standard Chartered Bank (Sh1.5 trillion), Exim Bank (Sh1.29 trillion), DTB (Sh1.26 trillion), Azania (Sh1.1 trillion) and TPB (Sh1.06 trillion).

As of December 31, 2019, BancABC had assets worth Sh315 billion while KCB Bank had Sh644 billion.

As of September 30, 2020, KCB Tanzania had assets to the tune of Sh707 billion while BancABC had Sh325 billion, suggesting that the merger could create an outfit with slightly more than Sh1 trillion.

Mergers and acquisitions have been common in Tanzania's banking industry during the past three years.

Apart from the BoT's regulatory measures to merge certain local banks over capital adequacy, some mergers have been purely necessitated by the need to change the landscape and improve banking sector in Tanzania, through consolidating assets, deposits and improving capital base.

On July 8, 2020, NIC Bank Tanzania Limited (NIC) and Commercial Bank of Africa (Tanzania) Limited (CBA) merged and started operations as NCBA Bank Tanzania Limited.

In August 2018, the sector witnessed the merger of Twiga Bancorp, Tanzania Women's Bank (TWB) to TPB Bank Plc, after the two former banks failed to meet the capital adequacy as required by the regulator.

That was to be followed by another merger that saw TPB Bank Plc officially joining the elite group of first-tier banks when its assets crossed the Sh1 trillion mark following its acquisition of assets and liabilities of TIB Corporate Bank.

On January 15 last year (2019), the BoT authorized the merger between Azania Bank and Bank M Limited to create yet another first-tier bank.

Though the KCB Bank and BancABC transaction is subject to regulatory approvals from the Bank of Tanzania (BoT) and the Fair Competition Commission (FCC) among others, the statement by KCB Bank says the merger will have several benefits on its operations which will ultimately benefit clients.

The benefits includes a complementary transaction that combines KCB Bank Tanzania's strong retail and corporate banking franchise with BancABC's retail and commercial banking operations.

"KCB Bank Tanzania and BancABC's customers to benefit from a well-capitalised bank, a more sophisticated product and service offering, and an enhanced distribution network across Tanzania," the statement reads.

The KCB deal comes months after Equity Bank Group called off its plan to acquire four banking subsidiaries from Atlas Mara Limited in a move aimed at preserving its capital in the wake of the Covid-19 pandemic.

The parties had initiated talks in April last year, but the negotiations targeting Atlas Mara's units in Rwanda, Zambia, Tanzania and Mozambique dragged on until the pandemic hit.

The London-listed firm had said then it would seek for another buyer for the four banks after the Equity deal collapsed.

Samuel [email protected]

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