Tanzania Places China Commercial Bank Under Administration

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Tanzania’s central bank took over the management of China Commercial Bank Ltd. from Thursday due to liquidity problems as the East African nation continues to tighten up banking supervision and encourage consolidation.

The Chinese lender failed to “meet regulatory requirements regarding capital adequacy and inability to effect restoration of capital to required levels,” Bank of Tanzania Governor Florens Luoga said in an emailed statement.

“In line with statutory administration procedures, China Commercial Bank Ltd. will not open doors for normal business for a period not exceeding 90 days, after which the Bank of Tanzania will determine the appropriate resolution option,” he said.

The small lender is owned by Tanzanian and Chinese shareholders. It was licensed in 2015 and is among 36 lenders registered in Tanzania as fully-fledged commercial banks.

It’s total deposits fell 79% by the end of 2018 to 3.98 billion Tanzanian shillings ($1.72 million), while assets declined by 65% to 12.8 billion shillings, according to central bank data. It had one branch and 19 employees as of 2018.

President John Magufuli’s government has been pushing for consolidation of local banks. The central bank has revoked the licenses of at least nine lenders over the past three years to safeguard stability of the industry.

The International Monetary Fund warned in a 2018 report that nearly half of Tanzania’s 45 banks were vulnerable to adverse shocks and risked insolvency in the event of a global financial crisis.

©2020 Bloomberg L.P.

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