After more than six months since Finance Bank, one of Zambia's leading lenders was shutdown for alleged flouting banking laws, the government decided to sell it off to South Africa's First National Bank for a value of USD 5.2 million.
According to the Lusaka based Bank of Zambia, the new owners have acquired more than 90% of shares in the lender after it was sold for ZMK 27 billion to First National Bank Zambia, a bank whose parent, FirstRand Limited provided top officers to run the bank after it was taken over by the Bank of Zambia in December 2010.
Bank of Zambia governor Mr Caleb Fundanga said in Lusaka that under the terms of the agreement, FNB Zambia was to take over about 96% of the total assets of FBZL and the remaining toxic assets of five loans worth ZMK 300 billion would remain with FBZ (under possession) to be administered by the central bank.
Under the new arrangement or acquisition, First National Bank Zambia would leap to become the fifth largest bank in the country from its current position where it is among the smallest. At the end of last year, Finance Bank was seized by the Lusaka based Bank of Zambia for allegedly breaching financial laws and was then managed by FirstRand. It has about 1,000 employees and 39 branches. FNB already operates in Zambia and has a presence in six other African countries excluding South Africa and Zambia.
According to sources close to the transaction, FNB didn't want to acquire those which had some problems ‘encumbrances’ and also excluded certain assets and liabilities which were still in court.
"The new buyer didn't want to acquire those which had some
encumbrances, and also when we did an inspection, there was a lot of non performing loans because there was a lot of insider lending and some of those assets are un collectable.
According to estimates, Finance Bank’s net asset value was about ZMK 22 billion and when excluded part advances, excluded first assets, also deferred taxes, it remains with a net asset value of ZMK 3 billion, leaving the purchase price estimated at ZMK 27 billion.
According to sources applications for injunctions by Finance Bank Zambia Limited shareholders in the three cases before the courts of law had been dismissed, allowing Bank of Zambia to perform its statutory mandate. Other institutions that expressed interest in acquiring Finance Bank included First Alliance Bank, Eximbank of Tanzania, I&M bank Limited from Kenya, JM Capital and Quantile Capital, both from South Africa.
On May 20th 2011, Central Bank governor stated that FirstRand made an offer in terms of which FNB Zambia would purchase selected assets and liabilities of FBZL adding that upon agreeing appropriate terms, the central bank had accepted the offer by FirstRand Bank on June 30th 2011.
Mr Sarel Van Zyl MD of FNB Zambia said that however, the buy off of the Zambian bank is unlikely to yield immediate results which according to new owners operations are likely to take off after nine months from the time of takeover of Finance Bank.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
