Kenyan M Oriental disowns collapsed Tanzanian bank affiliate

Monday August 6 2018

M Oriental Bank

M Oriental Bank Koinange Street branch in Nairobi, Kenya on August 2, 2018. PHOTO | SALATON NJAU | NMG 

By BUSINESS DAILY
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The Central Bank of Kenya (CBK) remained tight-lipped, four days after Tanzanian authorities placed under administration Bank M, a lender with Kenyan links, after it fell insolvent.

M Oriental, Bank M’s Kenyan affiliate, has in statements sought to distance itself from the collapsed Tanzanian lender.

“M Oriental Bank Limited does not have any association whether direct or through any interbank lending to Bank of Tanzania,” said M Oriental in a statement Monday.

Closed for business

The Bank of Tanzania (BoT) on Thursday last week in a statement said that Bank M would remain closed for normal business for 90 days “during which an appropriate resolution option will be determined.”

"The decision to take over the bank follows a determination by the Tanzania regulator that Bank M has critical liquidity problems and is unable to meet its maturing obligations," said the BoT.

The announcement shifted attention to the operations of Bank M’s Kenyan affiliate, M-Oriental.

M Oriental said while the CBK in 2016 gave nod for M Holdings Limited to acquire up to 51 per cent of M Oriental Bank Limited, M Holdings eventually only acquired only 33.8 per cent shares.

“M Oriental Limited continues its operations normally,” it said.

Commercial banks are licensed and regulated by the CBK in accordance with the provisions of the Banking Act and the regulations and prudential guidelines.

“As key players in the banking sector, commercial banks and mortgage finance companies are subject to regulatory requirements governing their prudential position and market conduct in order to safeguard the overall soundness and stability of the financial system,” says CBK on its website.