N.P.B

BoT queries Barclays Bank merger with NBC

THISDAY REPORTER
Dar es Salaam

THE National Bank of Commerce Limited’s plans to buy a controlling stake in Barclays Bank (Tanzania) Limited could be ’temporarily delayed’ because of queries about the deal from the Bank of Tanzania (BoT), it has been disclosed.

Impeccable banking sector sources have told THISDAY that the central bank, acting in its capacity as regulator of all financial services, has put a hold on the pending merger of the two banks.

They said the BoT, through its banking and supervision directorate is demanding certain reassurances from NBC before it can officially approve the planned take-over of Barclays Bank.

’’Among other things, the central bank wants solid guarantees that all shareholders of NBC are okay with the merger of the two banks,’’ said one well-placed source.

It is understood that the BoT has also asked the NBC management to confirm that the bank’s three shareholders have endorsed the valuation of Barclays Bank’s net worth.

South Africa’s banking giant ABSA Group Limited is the majority shareholder in NBC with a 55 per cent stake in NBC. Other shareholders are the government (30 per cent) and the International Finance Corporation - private sector lending arm of the World Bank - with 15 per cent.

The banking sector sources described the BoT queries about the imminent merger of the two banks as just ’temporary delays’, saying the deal is still on course to be concluded by next month.

Another source confirmed that the ABSA Group, in its capacity as majority shareholder in NBC, is actually the driving force behind the takeover bid as part of its common strategy for Tanzania and a number of other African countries.

’’Being minority shareholders, I don’t think the government or IFC can do anything to stop the deal from going ahead even if they disapprove of it,’’ the source said

Details of NBC’s take-over bid for Barclays Bank (Tanzania) are still somewhat sketchy and it remains uncertain how much the whole deal will be worth, although it has already been touted far and wide as the biggest-ever merger in the country’s banking history.

Privatized in 2000, NBC remains the largest commercial bank in the country with 35 branches and 52 automated teller machines (ATMs) in total.

On the other hand, Barclays Bank has also recently consolidated its position in local retail banking by opening ten new branches in Tanzania.

After the UK Barclays Bank franchise purchased a 56.4 per cent stake in ABSA, the bank’s South African bank took over the running of Barclays’ South African subsidiary at the start of 2006.

According to our industry sources, the plan is that in the coming five years ABSA takes over all Barclays Bank operations on the continent (with the exception of Egypt) through a series of similar acquisitions, which could make ABSA-Barclays the largest bank in Africa.

Apart from Tanzania, Barclays Bank is also operating in South Africa, Botswana, Egypt, Ghana, Kenya, Nigeria, Uganda, Zambia and Zimbabwe.

Latest media reports from Zimbabwe say the ABSA Group also plans to buy a 67.7 per cent stake in Barclays Bank (Zimbabwe) in a deal believed to be similar to the pending take-over bid in Tanzania.

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