By TZ Business News Staff
A Kenyan company affiliated to Tanzania’s Bank M has been issued a permit to acquire a majority 51 per cent shares in the Kenyan Oriental Commercial Bank Ltd in a move the Central Bank of Kenya (CBK) has described as strengthening the East African Integration process.
Bank M becomes the first Tanzanian bank to enter the Kenyan market by proxy.
On Thursday, June 16, 2016 CBK announced it had approved an application by M Holdings Limited to form a non-operating holding company under Section 13(1)(e) of the Banking Act of Kenya and the acquisition of a 51% stake in the shareholding of Oriental Commercial Bank Limited
Additional approval has been granted for a change of name of the acquired bank, under Section 3 of the Banking Act of Kenya, from Oriental Commercial Bank Limited to M Oriental Commercial Bank Ltd. The transaction and consequent changes are expected to be completed by September 2016, the CBK statement said.
Oriental Commercial Bank Limited was licensed in 1991 and was ranked 37th in terms of market share in the country as at 31st December, 2015 with nine branches. On the other hand, the CBK statement said, M Holdings is affiliated to Bank M (Tanzania) Limited, a commercial bank that is licensed and regulated by the Bank of Tanzania.
Bank M (Tanzania) Limited was licensed in February, 2007 and is focused on corporate and investment banking. Jacqueline Woiso, the Bank M Senior Vice President and Chief Executive Officer Designate recently said the Tanzanian bank would be expanding its activities both in Dar es Salaam, the gas town of Mtwara, with the possibility of setting up a sister operation in Kenya.
Jacqueline Woiso, Bank M Senior Vice President and Chief Executive Officer Designate
Woiso also told reporters Bank M had registered a 32% revenue growth during the last two years and were considering significant expansion. The bank currently operates three branches in Tanzania’s business capital, Dar es Salaam, she said, adding that plans had also been made to open an additional branch in Dar es Salaam, as well as setting up another branch in Mtwara where the discovery of gas has attracted all major banks in the country.
Entry into Mtwara would increase the number of banks in the gas town to eight within a short span of time, but Bank M was set to get into the competition. Other banks already in Mtwara include Boa Bank, Ecobank, NBC bank, NMB Bank, CRDB Bank, Exim Bank and the Tanzania Postal Bank.
Bank M was also planning to launch a subsidiary Private Banking Business Group to advise and manage the wealth of its high net worth clientele.
The bank’s five year composite business plan says Bank M wants to grow organically as well through acquisitions within Tanzania and in the promising neighbouring countries such as Uganda, Zambia, Rwanda and other countries with a plan to emerge as a leading Regional Bank in Sub-Saharan Africa.
Major shareholders of Bank M include the individuals Sean Patrick Breslin and Sanjeev Kumar. Other subscribers include Hon. Nimrod Mkono M.P, Fida Hussein Rashid, Vimal Mehta, Ramesh Patel and Iddi Simba. Corporate shareholders include Africareers Limited, Pride Tanzania, Equity & Allied Ltd and Sumaria Holdings Limited. Recent financial statements show the nine year old bank is focused on the niche market of corporate and investment clientele.
The bank registered a pre-tax profit of Tsh. 7.4 billion during the first three months of 2016, compared to Tsh. 6.1 billion at the same period last year. Bank M has only 300 clients so far, but they are liquid customers according to Ms Woiso.
Financial statements reveal that a large part of the profits came from interest income which amounted to Tsh. 22.11 billion, an increase of of 32% over the corresponding period last year,” Ms. Woiso said. Non-interest income was reported at Tsh. 6.6 billion, which was 15% increase over the corresponding period last financial year.
The Senior Vice President and Chief Executive Officer Designate said the bank’s total assets have grown from Tsh. 746.49 billion during the last financial year to the current Tsh. 889.11 billion, which is an annual growth rate of 19%.
“The results of the first quarter are quite encouraging as we start theis year and we believe the forthcoming quarters of this year will be even better,” Ms Woiso said, adding that the bank was also planning to increase the core capital through “a Private and Initial Public Offer.” But the plans are subject to approval by regulatory authoritiws, she said.
Bank M is a focused Corporate & Investment Bank (CIB) targeting the upper end Mid-Market and Corporate Enterprises in Tanzania, both in the manufacturing and trading sectors, according to a bank statement.
The CIB concentrates with a niche banking offer in the Corporate Banking and Markets (with special emphasis on debt and forex) business. Additionally, the CIB has an investment banking capabilities to handle advisories on debt/equity capital raising as well as debt syndication and M&A.
The cornerstone of the business plan of the CIB of Bank M is based on the liquidity intensive nature of the local manufacturing and trading businesses and therefore, offers innovative delivery channels and products through highly skilled teams of customer care and relationship managers. The Bank has a cautiously aggressive business acquisition strategy balancing growth needs with credit quality. Based on this strategy, Bank M is now amongst the top ten banks in the country.