HomeBusiness DigestMerger at advanced stage - First Bank boss

Merger at advanced stage – First Bank boss

Shakeman Mugari

FIRST Bank Corporation managing director Livingston Gwata says merger talks with an undisclosed listed firm are at an advanced level despite recent reports that business mogul Mutumwa Mawere

was against the deal.

Mawere has a large stake in First Bank.

Addressing a media briefing to announce the group’s year-end results, Gwata said the board had deliberated on the matter and experts were scrutinising the deal.

“The talks are at an advanced stage. For a transaction of that nature to go ahead the respective boards would have made recommendations. If there are certain individuals who are against it (merger) ultimately it is shareholders who will decide at an EGM,” said Gwata.

Although Gwata could not say which deal he was referring to, the market is awash with speculation that the bank could soon combine with Southern Africa Reinsurance (Sare) and National Discount House (NDH).

Speculation over the deal was triggered after the three financial firms signed a memorandum of understanding expected to culminate in a solid alliance.

Mawere is involved in the deal through equity links with the Southern Union Financial Holdings (SUFH), which currently holds a 22% stake in First Bank’s issued share capital.

He recently put a damper on the prospects of a deal saying it did not make sense.

“I don’t see how Zimre will go along with the deal,” Mawere said. “Zimre (now SUFH) is already a shareholder in FBC so what would another reinsurance company bring in? The deal doesn’t make sense, it only makes sense to individuals with narrow interests.”

These fears were however shot down by Gwata who remained optimistic that the transaction would go through.

The proposed merger is likely to culminate in the formation of one holding company, with the three companies being subsidiaries.

Analysts say First Bank wants a tie-up with NDH to take advantage of the discount house, asset management and stock broking arms under the company.

Unlike other locally-owned banks, First Bank is one of the few that have concentrated on core banking business.

For the period to December 31 the company’s profit before tax increased by 864% to $23,7 billion, up from $2,5 billion last year.

Earnings per share increased by 905% to 1 114 cents ahead of last year’s 111 cents per share.

The bank also announced that it is on course for meeting the $10 billion capital requirement. The directors did not recommend a dividend in order to conserve cash in light of the new capital requirement.

During the period under review First Bank had $16 billion in shareholder’s funds. The results however did not include the Democratic Republic of Congo venture where the bank has a management contract.

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