(Ecofin Agency) - National Microfinance Bank (NMB), Tanzania’s largest banking group by market capitalization, whose first shareholder (39.4% of share) is the Dutch financial group Rabobank is ready to participate in the consolidation of the country’s banking sector, so eagerly awaited by experts.
“Tanzania's banking sector, hit by bad loans and low lending, would be healthier if smaller banks were taken over by larger ones. If there is a coordinated effort to do a consolidation in the banking sector, of course, NMB will play a role,” Ineke Bussemaker, NMB’s Managing Director, told Reuters.
According to the financial stability report issued last December by Tanzanian central bank, the outstanding amount of bad loans (bank loans whose repayment term is exceeded) increased by 12%. In January 2018, 5 banks had their licenses withdrawn due to under-capitalization.
This situation forced NMB to make significant provisions for bad debts throughout 2017. The increase in bad loans is attributable to the country’s economic situation and the government's decision to fire 10, 000 civil servants, some of whom took up loans from the bank.
So far, no information was given about when the consolidation will occur and the resulting financial commitments. Likewise, the value of assets that may be sold has not been disclosed.