FMB to fully complete Barclays Zim transaction in 90 days after signing off with Plc
HARARE – First Merchant Bank of Malawi has said that it will take up to 90 days to obtain all regulatory approvals for its acquisition of the majority stake in Barclays Bank Zimbabwe and that it is well capitalised to fund the transaction using its own resources.
This comes after FMB signed an agreement with Barclays Plc over the purchase of around 42% of its Zimbabwean unit. Plc holds 67.68% of the group but will retain a residual investment of 10% while 15% will go towards an employee share ownership scheme. The banking group will be co-branded for about three years.
Speaking after notifying Barclays Zimbabwe workers of the transaction this evening, chairman Hitesh Andkat said the group expects the regulatory processes to take about 90 days after they signed a binding agreement with plc yesterday. An application to start the processes had been submitted to the Reserve Bank of Zimbabwe this afternoon. “We hope to get the transaction closed in a timely manner.”
He however could not disclose the full details of the transaction but added that FMB had funds to cover the transaction even though it had a good working relationship with various DFIs such as European Investment Bank, USAID, CDC. This comes amid reports that CDC had pulled out of the deal recently. Andkat said they are using the recently incorporated Mauritius entity for the transaction.
Sources however says PLC will not get full cash but gets invested in the buyer through an instrument which they will sell later through a Mauritian registered entity. This implies that Plc would look to complete getting sale proceeds from Mauritius over a period of time, a situation analysts say is essentially externalisation of value from Zimbabwe.
Andkat said the group, with operations in Malawi, Mozambique, Botswana and Zambia, looked at opportunities in Zimbabwe, but the environment was not “right.” They however settled on Barclays Zimbabwe because “it was a good bank, which happened to be up for sale.”Andkat also said that as Africans they had a better understanding of the situation in Zimbabwe.
Andkat and his group managing director Dheeraj Dikshit both laughed off reports that they were a bad bank with bad leadership. “If any of our board members are not fit and proper our central bank would have asked them to quit.”
On allegations of money laundering, Dikshit said: “absolutely not! These stories (side note…the majority of which were reported in 2013-14) were planted by people opposed to the transaction. Would regulators, as strict as they are, allow us to operate?”
He said FMB was bigger than Barclays Zimbabwe contrary to sentiment in the market and that even if they conclude the transaction, the bank would still have excess capital. “People were ignoring the full facts and cherry picking on what they thought would push their agenda”
At the meeting PLC was represented by Keith Ho and James Tervyln.