Bank of Tanzania Governor Idris Rashid announced on April 2 that the Bank of Tanzania had taken over the operations of the Meridien BIAO Bank. Its Board of Management had been suspended and the Bank of Tanzania’s advisor John Montgomery had been appointed the new manager. ‘The development followed the earlier take over by central banks of the Meridien Banks in Kenya (March 14) and Zambia (March 28).

‘The Tanzanian bank’s foreign exchange exposure amounted to Shs 17 billion ( US$ 30 million) which had apparently been transferred abroad to support other loss making branches. It was later announced that Tanzania might sue the Directors and management of the Meridien Bank if they fail to return the $30 million.

Mr Rashid assured the public that the Bank would remain in operation and there was no need for panic as the measures taken were aimed at safeguarding macro-economic stability and protecting the interest of depositors. Negotiations were under way with local and foreign firms interested in buying the bank.

Meridien BIAO was the first private international bank to be licensed to conduct business in Tanzania two years ago when banking restrictions were lifted. It soon became the third largest bank in Tanzania after the National Bank of Commerce and the now privatised cooperative and Rural Development Bank. It had 30% of the total business.