Merger of two banks with local presence imminent

03Mar 2016
Victor Karega
The Guardian
Merger of two banks with local presence imminent
  • We are eager to continue serving the unique loan, investment, and deposit needs of Tanzanians BBT’s Managing Director Kihara Maina said

IN what would be a first if successful, two major financial institutions, Barclays Bank Tanzania (BBT) and NBC Bank, are in talks for a merger that would create a single presence in the country.

Kihara Maina

The desired outcome of the ongoing discussions between Barclays Africa Group Limited (BAGL) and Absa Group Limited is to expand and build lifetime relationships with their customers, said Kihara Maina (pictured), BBT’s Managing Director.

“BBT and NBC continue to share a common parent, but there are clear guidelines on how we operate in this market; that’s why the appropriate authorities are in discussions in achieving that outcome. We are eager to continue serving the unique loan, investment, and deposit needs of Tanzanians,” he revealed recently.

Maina explained that NBC are independent and BBT have their own board, so they continue to respect that. The banker noted that the combined bank will aim to become a unique company that is neither a mega bank nor a regional financial institution.

According to him, they would become a bank that’s serious about service and prepared to raise the bar.

“This merger will enable us to remain a mutual community bank while operating greater benefits to our customers, employees and community,” he added.

He pointed out that their robust, progressive products and services introduce the latest in convenience and personal service.

The plan to merge started many years ago, but as the two groups are still in talks, the current staff will continue to serve clients and manage the banks, he noted.

BBT’s commitment to its customers and community remains a priority; joining forces with NBC will add to ways to serve customers, he stressed.

BBT has over 711.25bn/- in assets, with customer deposits amounting to 613.15bn/- by the end of December 2015. The bank is still struggling to find a niche in the face of tough competition with larger rivals and regional lenders.

Before Absa Group acquired the Africa operations from Barclays in a R18 billon (3trn/- ) deal in 2012, it owned 55 per cent of NBC in Tanzania. The merger led to Absa Group taking over BBT, making it an investor in two competing banks in Tanzania.

Kokkie Kooyman, Sanlam Investment Management Global fund manager said the only reason why you would keep them separate is if they segment the customers they serve.

“But it does not make sense to run separate banks for a long period. You are inefficient in terms of capital, staff, liquidity and you must be inefficient in terms of your branches. You might want to scale some of your branches,” according to Kooyman.

NBC offers retail, corporate and treasury services. Barclays Bank Tanzania offers retail and corporate banking services including cash management and trade finance services.

This arrangement, operating BBT and NBC as independent entities with separate boards and management teams, will continue for the foreseeable future, noted BBT boss.

Niladri Sekhar General Manager at Mobile Financial Services Craft Silicon said the merger will improve the balance sheet capabilities of the merged bank, hence resulting in a stronger bank which will have a competitive edge over other banks both in the domestic and global markets.

He said the consolidated entity would be more effective, efficient and sustainable in carrying out the mandates of both banks, particularly in anticipation of the wave of foreign banks that may enter the Tanzanian market.

Other countries where the operations of the two units could be merging are Botswana, Ghana, Kenya, Uganda and Zambia.

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