Kenyan bank affiliated to Bank M reassures its clients

Nairobi. Officials at M-Oriental bank have insisted that the closure of Bank-M, a Tanzania lender, which has a close relation to the former wouldn’t affect its operations.

On Thursday, a spot check at three of M Oriental’s branches in Nairobi, including its headquarters, operated normally and its officials maintained that it had not been affected by developments in Tanzania.

Tanzanian authorities Thursday placed Bank M Tanzania Plc, under administration after it fell insolvent, putting Kenyan regulators on high alert.

The Bank of Tanzania said in a statement that Bank M, from which some of its majority shareholders recently launched operations in Kenya after it bought Oriental Commercial Bank in 2016, will not open for normal business for 90 days.

The decision to take over the bank follows a determination by the Bank of Tanzania that Bank M has critical liquidity problems and is unable to meet its maturing obligations, according to BoT governor Professor Florens Luoga.

M Oriental had seven branches, including in Kitale, Nakuru, Mombasa and Nairobi as at the end of last year run by 105 employees.

M Oriental’s profit after tax grew 286 per cent to Sh96.5 million in 2017 from Sh33.6 million the previous year.

The bank’s customer deposits stood at Sh7.46 billion having grown at the rate of 7.59 per cent from Sh6.93 billion a year earlier.

Prior to the acquisition, Oriental Commercial Bank was classified as a small lender.

The bank which was formerly known as Delphis Bank had been placed under receivership in June 2001 but re-opened under a scheme of arrangement that converted 70 per cent of the deposits to equity.

“To our credit, we have been the only bank in the past few decades that went into receivership, recovered well and is posting profits,” M Oriental Bank chairman Shanti V Shah said in 2016 during the relaunch as M Oriental.

M Holdings Group chief executive Sanjeev Kumar said in 2016 that following the acquisition of M Oriental, the bank would focus on large family businesses to grow its loan book and balance sheet.

M Oriental Bank was being repositioned as a wholesale bank that is focused on large family businesses with a range of innovative products and services.

During the M-Holdings Group chief executive officer Sanjeev Kumar said M Oriental would seek to replicate its niche business model that had seen the group’s Tanzanian unit attain success by restricting its services to high net-worth individuals and family businesses.

“We have created Bank M as a strong wholesale bank in Tanzania and we aspire to transform M Oriental as the preferred bank for large family businesses in Kenya,” he was quoted as saying.