In 2000, Absa acquired majority shares of National Bank of Commerce (NBC) while a year later Barclays made a come back after 33 years since it was nationalised in 1967 and was named NBC.
The combination discussions emerged last week following Barclays acquiring of majority stake in Absa, South Africa's third-largest bank, in 2005. Though the two have remained separate entities outside South Africa.
A statement issued over the weekend indicates that the proposed merge in respect of Tanzania would only include Barclays Bank, while Absa's majority interest in NBC of 55 per cent would be maintained. "Barclays Bank of Tanzania and NBC would continue to operate as two separate and independent entities, with separate Boards and management teams," the statement, issue by Acting Head of Corporate Affairs Tunu Kavishe, said.
However, market analysts told the 'Daily News' that the merge of NBC and Barclays is poking out and only time will tell giving the current situation and competition in banking industry in the country. Another fact is that both Barclays and NBC are struggling to shrug off bad debts, blamed for huge losses they make in three months that ended June this year. NBC posted all time loss of over 20bn/- while Barclays reported a loss of over 6bn/-.
On the other hand Barclays recently closed down 10 branches saying it was restructuring which enabled it to invest more effectively in other opportunities. NBC recently embarked on a strategy to raise deposits terming it as a move to help people to cultivate saving culture.
Though, both banks are optimistic that the remaining half of this year things will turn around to deliver good profits because variables to clean the balance sheet are on their sides. Zan Securities Chief Executive Officer Mr Raphael Masumbuko said making losses in one quarter is not necessarily a warrant to generate losses in full year.
"Things may turn around and the bank end up generating a good profit," Mr Masumbuko said. Barclays Tanzania and NBC are among top six banks in the country in term of profitability, footprint, assets and deposits. Barclays first opened its doors in Tanzania in 1925 and continued to operate in the country until 1967 when its operations were nationalized to become NBC. It made the comeback in the year 2000 to expand to 25 branches, 44 ATMs strategically located countrywide, over 400 employees and over 110,000 customers.
While NBC has 53 branches, a fully fledged contact centre, 300 Visa and MasterCard enabled ATM’s and 264 point of sale devices strategically located throughout the country. The bank has employed 1,387 staff members at the end of June this year. The discussions are expected to involve the combination of Barclays' interests in Botswana, Ghana, Kenya, Tanzania, Uganda, Zambia and the Indian Ocean with Absa.
The proposed combination, however, would be subject to, among other things, the approval of the Boards of Barclays and Absa as well as Absa shareholder approval and regulators, like Bank of Tanzania, approvals in the relevant jurisdictions. Commenting on the rationale for the proposed combination, Chief Executive of Absa Group and Barclays Africa Maria Ramos said they have already consolidated the regional offices for Absa and Barclays Africa and introduced a global product strategy for banking across the continent.
"This proposed combination of the businesses will mirror the managerial and operational structure we have already put in place," Ms Ramos said signifying no reverse on the merge strategy. Last year Barclays Plc announced its ambition to deliver One Africa strategy by combining the majority of the Barclays Africa businesses with Absa, which it termed as a "next logical step."
Ms Ramos said the combination geared to assist the bank to leverage the significant potential of the two banks businesses and provide a platform for further growth for betterment of their clients and shareholders. "It's not clear how the ownership structure will work or whether Barclays will take a larger stake in Absa, as 'there's lots of work to be done and it's very early days," Ramos was quoted by international news agencies saying.