Off the wire
• U.S. stocks extend losses after GDP report  • UN agency raises alarm about emergency in northeast Nigeria  • Yemen's Houthis deny targeting Mecca with missile  • Mozambican former president defends finance freedom for efficient governance in Africa  • Feature: Italy-China Innovation Week in Naples spotlights start-ups, creative talents  • Lithuanian Social Democrats to negotiate with Peasants on forming coalition  • Spotlight: EU, Canada trade deal salvaged after Belgian drama  • UN chief slams deadly attack on Syrian school  • UN chief to open crucial phase of talks on Cyprus  • Roundup: Belgium's regional parliaments approve CETA deal  
You are here: 　 Home

Tanzania's central bank takes over operations of state-run bank over loss making

Xinhua, October 29, 2016 Adjust font size:

The Bank of Tanzania (BoT) said on Friday it has taken over the operations of the state-run Twiga Bancorp Limited with immediate effect and sacked the entire board of directors and management of the loss-making bank.

The move came four months after the east African nation's President John Magufuli ordered the central bank to take action against failing banks that are owned by the government.

Benno Ndulu, BoT Governor told a news conference in the commercial capital Dar es Salaam that Twiga Bancorp has been placed under statutory management of the central bank because its capital had fallen to alarming levels.

The central bank has suspended commercial operations of Twiga Bancorp for one week to reorganize the institution. This means that customers of the bank would not be allowed to withdraw or deposit money for 7 days starting from now.

The bank has fallen well short of its stated vision of being "the most efficient and profitable bank in Tanzania."

Formerly known as the National Bureau De Change, Twiga Bancorp Ltd was established in 1992 as a fully-owned subsidiary of the then state-owned National Bank of Commerce.

Twiga Bancorp was transformed into a non-bank financial institution in 1998 and was empowered to handle all bank transactions with the exception of taking deposits on current accounts.

The troubled bank currently has five branches -- Dar branch, Arusha, Mlimani City (Dar es Salaam), Dodoma and Mwanza.

The bank's now-suspended chief executive officer, Cosmas Kimario, told the watchdog parliamentary Public Accounts Committee (PAC) last month that the financial institution is expected to make a turn around this year and make a profit.

The chairman of the bank's board of directors, Dr Hamisi Kibola, who has now been dismissed along with other members of the board said last month the bank had adopted a new five-year strategic plan from January 2016 that aims to revive its fortunes.

The bank previously planned to issue an initial public offering (IPO) at the Dar es Salaam Stock Exchange (DSE) to raise its capital.

BoT last year reviewed the capital adequacy requirements for commercial banks by raising the minimum core capital levels.

The main objective of the Banking & Financial Institutions (Capital Adequacy) Regulations of 2014 is to ensure that banks and financial institutions maintain a level of capital which can protect them from the losses that arise out of their business activities.

The BoT has given a 3-year moratorium to banks and financial institutions to comply with the new requirements under the capital adequacy regulations.

The BoT's thinking is that the higher a bank's capital level is, the better chances it has to withstand financial shocks, hence enhancing the resilience of the country's banking sector.

The financial services sector is one of the fastest-growing sectors of the economy with more than 50 banks operating in the country.

The central bank placed the Federal Bank of the Middle East under its supervision in July 2014 after the bank came under investigation in the United States for money laundering allegations. Enditem