Source: FMB’s Barclays bid supported by UK firm | The Herald
Business Editor—
First Merchant Bank Malawi is reportedly working with international development finance group CDC in its bid to acquire a majority stake in Barclays Bank of Zimbabwe (BBZ). CDC Group Plc is a development finance institution incorporated in England and Wales. It has supported the building of businesses throughout Africa and South
Asia and in Zimbabwe, CDC once had a presence among other companies in Cairns Holdings.
Well placed sources told The Herald Business that the FMB bid to acquire a 57,68 stake in BBZ held by its parent Barclays Plc was being supported by CDC as the bank has no financial capacity to take over a much superior asset.
At the close of the 2016 financial year, BBZ had a market capitalisation of $65,19 million against the FMB group’s of $33,76 million. In terms of deposits, BBZ was at $391,7 million against FMB’s $144,48 million. There is also a huge gap on total assets with Barclays Zimbabwe at $476,2 million against FMB’s $208,75 million.
Efforts to get a comment from CDC were fruitless at the time of going to print.
This publication understands that the Malawian bank was in discussions with World Bank’s International Finance Corporation over the bid but the latter pulled out of the deal after raising integrity and ethical issues over the bank’s tainted past.
Concerns have been raised over the calibre of directors of FMB amid revelations they were implicated in alleged corporate misgovernances and malpractices in lending. The bank has also been implicated in racism allegations.
Two of the directors Dheeraj Dikshit (the managing director) and Rasik Kantaria have been in the news over allegations of lending malpractices and failure to comply with Malawian laws over money laundering and externalisation.
Information from various regional publications, shows that the main shareholders of the banking group are alleged to have been involved in externalisation and money laundering.
In Zimbabwe, under the Banking Amendment Act, a director or manager of a failed bank whether in the country or outside, is not allowed to take up a role in any local bank.
Strangely enough, a due diligence by the Reserve Bank of Zimbabwe did not raise any issues with the bank and as such is not opposed to the transaction.
Under the transaction, Barclays Plc would keep a residual investment of 10 percent and also keep its brand over the transitional period in the event that the transaction sails through while sources also say the deal will not entail exchange of cash but that Plc would get significant shareholding in an entity that will be registered in Mauritius.
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