Yetu shareholders: please give our bank back

Yetu Microfinance complained on Thursday that “it was never given the opportunity” to defend itself on the ongoing capital and liquid saga that permitted the regulator to close its business.

The Bank of Tanzania (BoT) late last year put the pro-poor bank administration under its supervision saying the microfinance entity for 90 days due to inadequate capital and liquidity ratio to suffice business continuation.

The BoT after 90 days in March extended the period by one month before transferring Yetu Microfinance assets and liability to NMB Bank last week.

Youth Self Employment Foundation (YOSEFO), Chairman Ernest Ndimbo, said on behalf of shareholders that want the regulator to return the banks to them since no law was violated.

“The central bank failed to tell shareholders of any irregularity during the AGM despite having a representative at the meeting.

“Therefore we asking the authority to return Yetu to its shareholders,” Mr Ndimbo, who is chairman of YOSEFO trustee board said in a lengthy statement yesterday.

Yetu is the product of YOSEFO which is a Tanzania-based microfinance institution dedicated to helping low-income entrepreneurs lift themselves out of poverty.

The chairman quoting Banking and Financial Institutions Act, 2006 section 56(1) and (2) said Yetu was within the regulations line before the central bank took over.

He said under Section 56 (b) “the bank was never requested to add capital has failed to become adequately capitalized when required to do so by the Bank [BoT].” also Yetu has never failed to submit a capital restoration plan acceptable to the Bank when required according to section 34.

“The bank had sufficient capital the only,” Mr Ndimbo said but admitted that “the challenge was liquidity while trying to stabilize BoT blocked the efforts.”

The chairman further said the Yetu never failed to materially implement a capital restoration plan accepted by the BoT, instead was “never given the opportunity.”

The statement further said that Yetu wanted to raise funds by issuing an IPO on February 2020 but Covid-19 made it impossible to raise additional capital which was mainly for providing liquidity to the bank and reducing capital holding of YOSEFO to 31per cent.

“The bank had negotiated a long-term loan term loan with IFC [International Finance Corporation] and overdraft facility with NMB bank,” the statement further said, “the bank has a shareholder from France who was ready to inject additional fund.”

The bank has 12300 active shareholders and its trading at Dar es Salaam Stock Exchange was suspended almost a month ago.

BoT, last Wednesday, transferred the assets and liability of Yetu to NMB, but the presser didn’t map out the fate of shareholders.

BoT said in a release they placed Yetu under its administration to determine the best resolution to its regulatory challenges.

“Normal business operations of Yetu Microfinance were suspended to allow the Bank of Tanzania to determine the appropriate resolution option,” the regulator said in a press release.

The central bank said as per its mandate as provided under Section 59 (4) of the Banking and Financial Institutions Act, 2006, the process of determining the resolution option of Yetu was completed, and the transfer of assets and liabilities to an existing bank has been adopted as the formal resolution option effective on Wednesday.

“Depositors and other creditors of Yetu Microfinance will be advised in due course how and when they will commence accessing banking services through NMB,” the statement said.

Additionally, the regulator said all borrowers are required to continue paying their maturing obligations as per the terms and conditions of the agreements.

“The Bank of Tanzania reiterates its commitment to protect the interests of depositors, creditors and maintain the stability of the banking sector,” the release said.

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