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Banking industry

Absa Group Limited Acquires 70% of Tanzania's National Bank of Commerce

Strategic Insights

— 1 min read

Absa Group Limited, the South African financial services group, has signed a memorandum of understanding with the Tanzanian government to acquire 70% of its shares in the National Bank of Commerce (NBC). The move reflects the growing push by South African companies into Tanzania, which has shown signs of economic recovery after years of socialism. The acquisition is seen as a significant step in Tanzania's economic reform program and has been welcomed by the International Monetary Fund. The sale will also see the Tanzanian government sell a substantial portion of the remaining 30% through the fledgling Tanzanian stock market.

Key Takeaways:

  • Absa Group Limited has signed a memorandum of understanding with the Tanzanian government to acquire 70% of its shares in the National Bank of Commerce (NBC).
  • The acquisition is seen as a significant step in Tanzania's economic reform program and has been welcomed by the International Monetary Fund.
  • The bank has a network of 34 branches which will remain open, many of which are in far-flung reaches of the country.
  • The sell-off is also considered a significant step in Tanzania's economic reform programme, with the government planning to sell a substantial portion of the remaining 30% through the fledgling Tanzanian stock market.
  • Analysts have raised concerns about the bank's large non-performing lending book, with some suggesting it has a negative net worth in excess of Tzs5bn ($6.6m).
  • The acquisition will be a large commitment for Absa, which beat rival bids by Barclays Bank and Stanbic.

Statistics:

  • 70%: The proportion of shares in the National Bank of Commerce that Absa Group Limited will acquire.
  • 30%: The proportion of shares that the Tanzanian government will retain in the bank.
  • 34: The number of branches that the National Bank of Commerce has, which will remain open.
  • Tzs10bn: The authorised capital of the National Bank of Commerce, following a government injection of Tzs7bn in 1997.
  • Tzs5bn: The estimated negative net worth of the bank, according to analysts.
  • $6.6m: The equivalent value of the estimated negative net worth of the bank in US dollars.
  • 1997: The year in which the original National Bank of Commerce was split into the commercial bank and a micro-finance institution.

Sources:

  • Financial Times Limited, 1999.

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