BoT takes over control of Yetu Microfinance Bank

Dar es Salaam. The Bank of Tanzania (BoT) has placed Yetu Microfinance Bank Plc under statutory administration starting Monday December 12, after the lender failed to meet capital and liquidity requirements.

Following the decision, the bank will not be open for normal business for a period not exceeding 90 days during which the central bank will determine an appropriate resolution option, the BoT said in a statement

The central bank places a bank under its administration once it notes the liquidity shortage and undercapitalization to protect depositors and the financial sector.

“…to permit Yetu Microfinance Bank Plc to continue with banking operations while under the state of shortage of liquidity and undercapitalization is detrimental to the interest of depositors and poses a systemic risk to the stability of the financial system,” the central said in a statement issued by the governor, Prof Florens Luoga.

According to Yetu Microfinance Bank Plc financial results for 2021, the bank had assets valued Sh17 billion, compared to Sh19.6 billion during the previous year.

The bank’s customer deposits stood at Sh3.69 billion in 2021 while it had extended loans worth Sh13.63 billion.

Between 2020 and 2021, the bank also extended its loss after taxes from Sh54 million to Sh1.42 billioN.

With regard to the customers’ deposits, a seasoned banker and financial advisor, Mr Kelvin Mkwawa said the 90-day timeline also applies.

“After the 90 days, possible resolutions include the transfer of the bank assets and liabilities to a new owner, which can be another bank. So until then, depositors have to wait,” he said.

“It also depends on the appetite in the market, if they fail to find a buyer until then, the central bank can also oversee the sale of assets of the bank in order to repay customers’ money,” he said.

The BoT assured in its statement yesterday that it would ensure that the interests of the customers are protected.

“The Bank of Tanzania assures the public that it will continue to protect the interests of depositors and maintain the stability of the banking sector,” it stated.

In January 2018, the BoT closed down five microfinance institutions by withdrawing their operating licences after their capital fell below the legal minimum.

In August of the same year, Bank M was placed under Bank of Tanzania administration, joining FBME and Twiga Bancorp, whose operations had been placed under the BoT administration.

Twiga Bancorp was merged with the Tanzania Postal Bank (TPB Bank) after one year of BoT management while the FBME licence was revoked after it was found guilty of money laundering.

In March 2019, the BoT transferred Bank M’s assets and liabilities to Azania Bank Limited.