THE Bank of Tanzania (BoT) has taken over and placed China Commercial Bank under statutory administration effective on Thursday.
The central bank’s decision came almost six years after the bank, which analysts categorised as a small bank, was incorporated in the country. The lender, which wanted to capitalise on Sino-Tanzania trade, has failed to maintain a required capital.
BoT Governor, Prof Florens Luoga, told reporters that the decision to take over was with effect from Thursday morning, following the bank’s failure to meet regulatory requirements on capital adequacy.
"Pursuant to powers conferred upon the Bank of Tanzania under Section 56(1)(g)(i) &(iii) of the Banking and Financial Institutions Act, 2006, the Bank of Tanzania has effective from today November 19, 2020 taken over and placed under statutory administration China Commercial Bank Limited," said Prof Luoga.
He said BoT had appointed a statutory manager a very competitive woman in such affairs, who he said would be announced later to manage the affairs of China Commercial Bank.
Moreover, the central banks had also suspended its board of directors and management.
The governor said China Commercial Bank would not be open for normal business for a period not exceeding 90 days during which BoT would determine an appropriate resolution option.
He assured members of the public that it would continue protecting the interests of depositors and maintaining the stability of the banking sector, as he calmed customers to be patient during the 90-day when things were being sorted out.
Prof Luoga said permitting China Commercial Bank to continue with banking operations while under the state of undercapitalisation was detrimental to the interests of depositors and posed a systemic risk to the stability of the financial system.
The governor said during the period in which the bank would be under statutory administration, the bank would be closed and customer should be patient as BoT was studying the best practice, go through the assets and liabilities and capital to make an informed decision.
In January 2018, BoT closed five banks due to low capital.
The banks closed were Tanzania Women Bank, Efatha Bank, Covenant Bank for Women, Njombe Community Bank, Kagera Farmers' Cooperative Bank and Meru Community Bank.
Twiga Bancorp and the Tanzania Women Bank were forced to merge with the Tanzania Postal Bank in May and August 2018 respectively. Bank M was put under BoT statutory management and later sold to Azania Bank early last year.