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Bank M Tanzania eyes Kenyan market

BUSINESS
By Lee Mwiti | Jun 8th 2016 | 2 min read
By Lee Mwiti | June 8th 2016
BUSINESS

 

A Tanzanian bank is set to enter the Kenyan market after applying for a licence from the Central Bank of Kenya.

Bank M Tanzania now seeks to spread its tentacles even further into the country, after its mother company, M Holdings, last year received a go-ahead from the Competition Authority of Kenya to acquire 51 per cent of Oriental Bank. The Tanzanian lender, which was started in February 2007, has made it clear that it is targeting family owned businesses.

“Our business is focused on family owned enterprises and this strategy has provided us with a very clear direction on understanding the business requirements of the Kenyan market which, even in our original market in Tanzania, are family-owned businesses,” Chief Executive Officer Jacqueline Woiso said while outlining the bank’s entry plan into Kenya.

The entry of Bank M into the country marks the first significant admission of a Tanzanian bank into the Kenyan competitive local banking industry. The lender is ranked among the top 10 banks in Tanzania.

Records show that it is owned by 15 shareholders, with Vimal Mehta as its largest shareholder with a 16 per cent stake. Mr Mehta is the chairman of Negus group of companies, which formerly held a controlling stake in Serengeti Breweries.

Oriental Commercial Bank was formed from the ashes of Delphis bank, which was owned by imprisoned billionaire businessman Ketan Somaia. Delphis in 2001 was placed under statutory management, when it failed to meet its obligations to other banks, a process that eventually led to the formation of Oriental Commercial Bank in its place.

Created shares

Last year, the shareholders of Oriental declared a willingness to invite strategic investors to help with the lender’s expansion plans, after its profits in 2014 dropped by 49 per cent to Sh72 million. This was a result of the bank being weighed down by higher interest expenses and reduced income from transactions.

During last year’s general meeting, Oriental Bank declared plans to issue new shares to accommodate new investors seeking equity in the company. The lender therefore decided to create 50 million new shares worth Sh1 billion. Ultimately, Bank M Tanzania took up the newly created shares at a cost of Sh1.3 billion to takeover a controlling stake.

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