Barclays Bank Zim acquisition finalised

Source: Barclays Bank Zim acquisition finalised | The Herald June 1, 2017

Happiness Zengeni Business Editor
FIRST Merchant Bank of Malawi finalised the acquisition of the majority stake in Barclays Bank of Zimbabwe from its parent company, Barclays plc amid reports the signing was pushed forward by a week to ward off several objections and interdicts. FMB, a financial institution created in 1995, is listed on the Malawi Stock Exchange, while it also has equity interests in banking operations in Botswana, Mozambique and Zambia. Barclays Bank Zimbabwe was established in 1912, and has operated continuously since.

A binding agreement was signed between Barclays Plc and FMB in London on Tuesday, while an application for regulatory approval was made to the Reserve Bank of Zimbabwe yesterday. The process to obtain regulatory approvals is expected to take about 90 days.

Barclays Plc holds a 67,68 percent in the Zimbabwean subsidiary but had classified it as non-core pending its sale. Although the full details of the transaction are not yet public, FMB chairman Hitesh Anadkat told The Herald soon after addressing part of the group’s workers at a town hall meeting last night, that the Malawian group would hold around 42 percent of the group while Barclays Plc will maintain a residual investment of 10 percent and an employee share ownership trust (ESOT) would get the remaining 15 percent. The ESOT shares will be held in a trust in perpetuity.

The Herald understands that Barclays plc will not get full cash for the transaction but will be invested in FMB through an instrument which it will sell later or over time.

The transaction comes amid several objections with Barclays Bank of Zimbabwe junior workers seeking an interdict citing likely non-compliance with indigenisation requirements among other concerns.

Some sections of the financial markets had also raised concern that the Malawi headquartered group has been involved in past controversies, which do not bode well with the traditionally conservative Barclays Zimbabwe and which go against the new rules contained in the Banking Amendment Act.

Concerns have also been raised over the size of FMB when compared to Barclays Zimbabwe. However Mr Anadkat said FMB was much bigger considering its asset base in the countries it operates in.

“If you look at the whole group, FMB already has excess capital and its assets much bigger than Barclays Zimbabwe. In fact we are using our funds to finance this acquisition.”

Well-placed sources told this publication that the signing had been rushed to avoid a negative run on the bank due to the rising objections.

Group managing director Dheeraj Dickshit immediately dismissed the allegations about corporate misgovernance and money laundering as “planted stories from people who did not want the deal to go through.”

He said the bank had a good reputation and “if it was going against good corporate governance, the regulators in the markets in which it operates and the Reserve Bank of Zimbabwe, would not have allowed us to see this transaction through.”

Mr Anadkat said that the directors of the bank were fit and proper. “Fit and proper tests for central banks are very similar. . . so what Malawi views as fit and proper, Zimbabwe also comes up with the same result.”

He said the bank would remain listed on the Zimbabwe Stock Exchange and would be co-branded for about three years while they would retain the right of first refusal should Barclays Plc decide to sell its 10 percent

Meanwhile, Barclays Plc said it will sell a further 22 percent stake in South Africa’s Barclays Africa Group Ltd, a holding worth about $2 billion at current prices, as part of the UK bank’s plan to shrink its operations and bolster capital strength.