BoT okays proposed Absa-NBC merger, sets key conditions

The clarification comes days after Bloomberg reported that Absa Group was nearing a deal to consolidate its banking operations in Tanzania by combining the two lenders into an institution with assets of nearly $3 billion.

According to the report, NBC is expected to acquire the assets of Absa Bank Tanzania Ltd. Absa Group wholly owns Absa Bank Tanzania and holds a 55 percent stake in NBC. The Government of Tanzania, through the Treasury Registrar, owns 30 percent of NBC, while the International Finance Corporation (IFC) holds the remaining 15 percent.

If completed, the merged institution would become Tanzania's third-largest bank by assets, behind CRDB Bank and NMB Bank.

Speaking to The Citizen, BoT Governor Emmanuel Tutuba said the central bank had already issued a no-objection after Absa Group presented its proposal more than two years ago, allowing the shareholders to proceed with internal approval processes.

"We gave them a no-objection approval, and they have been continuing with the shareholders' process. Once they complete that process, they can submit a formal application to merge," Mr Tutuba said.

He said the shareholders would determine the structure of the transaction, including whether the banks would merge under a new name or whether one institution would absorb the other.

"That is a commercial decision for the shareholders. Once they agree, they will submit the relevant application and supporting documents to the central bank for approval," he said.

Mr Tutuba said the BoT would assess the application after it is received and grant the required licence if all regulatory and compliance requirements are met.

However, he said it was not possible to indicate when the process would be completed because the timing depended on the shareholders and the licensing process.

"We do not know when they will be ready because they must first complete the necessary compliance requirements. The process could take weeks, months or longer," he said.

The Office of the Treasury Registrar (OTR), which represents the Government's shareholding in NBC, also declined to comment on the progress of the proposed transaction.

OTR Head of Public Relations and Communications Sabato Kosuri said shareholders would communicate their position at the appropriate time.

The proposed merger is the latest sign of continued consolidation in Tanzania's banking industry as lenders seek greater scale, stronger capital positions and improved operational efficiency.

The sector has undergone significant restructuring over the past decade, driven by tighter regulatory requirements, increasing investment in digital banking and the need to strengthen financial institutions.

One of the largest state-led consolidations created Tanzania Commercial Bank (TCB). In 2018, the BoT merged Twiga Bancorp and Tanzania Women's Bank into Tanzania Postal Bank before the institution absorbed TIB Commercial Bank in 2020 and later rebranded as TCB.

In the private sector, Barclays Bank Tanzania rebranded as Absa Bank Tanzania in 2020 following changes to Barclays Plc's African operations.

Exim Bank acquired the assets and liabilities of First National Bank Tanzania in 2022, while 2023 saw Yetu Microfinance Bank's assets and liabilities transferred to NMB Bank after it failed to meet minimum capital requirements. During the same year, Letshego consolidated its Tanzanian operations by merging its two local entities into Letshego Faidika Bank.

Earlier regional consolidation also saw NIC Bank and Commercial Bank of Africa merge to form NCBA, bringing together their East African operations.

By late 2024, African Banking Corporation had merged into Access Bank Tanzania, while Canara Bank exited the Tanzanian market after its operations were absorbed by Exim Bank through a BoT-facilitated process.

The central bank has consistently encouraged mergers and acquisitions to strengthen the banking sector. Institutions that struggle to meet capital adequacy requirements or keep pace with investment in technology are increasingly expected to seek strategic partners or consolidate their operations.

If the proposed Absa-NBC transaction proceeds, it will mark another milestone in the ongoing transformation of Tanzania's banking industry, creating one of the country's largest lenders and further reshaping competition in the sector.