INSURANCE giant and dually listed Old Mutual Ltd is set to acquire a stake in Trust Banking Corporation Ltd as negotiations between the two parties are now at an advanced stage, reliable source
If successful this will result in Old Mutual being a major shareholder.
However, following established precedents within the financial services sector on any issue pertaining to mergers or outright acquisitions, both Old Mutual and Trust Bank were evasive on the progress of their discussions made so far.
But industry analysts this week said that the London, Malawi and Zimbabwe Stock Exchange listed firm was making some inroads in Trust Bank.
The two firms have been discussing since early last month.
Trust Bank, which recently faced speculation about its survival following revelations that the group had lost 30% of its deposits due to the liquidity problems that had hit the financial sector is now looking for assistance from its partners.
Old Mutual’s chief executive officer Graham Hollick refused to comment about his group taking a stake in Trust Bank saying that they only pursue an investment philosophy that benefits shareholders.
“We are in regular pursuit of opportunities that meet our investment requirements,” Hollick said.
“Discussions therefore continue on virtually a daily basis with organisations in all sectors of the economy with regards to either active participation or investment. It would be imprudent to single out, comment upon or indeed discuss any specific operation that may meet our investment criteria.”
Old Mutual has been operating in Zimbabwe for almost 100 years.
Locally Old Mutual owns another financial institution, Central African Building Society (Cabs).
Cabs is the country’s largest building society.
Hollick could not however disclose when the discussions were likely to be concluded.
If the discussions are successful this will result in management changes at Trust Bank.
Trust is still on the market where it is seeking assistance from First Mutual Life and National Railways of Zimbabwe Pension Funds to guarantee borrowed funds from the central bank.
Trust was availed $80 billion from the central bank for it to receive liquidity support.
Trust managing director Dominic Magwada told businessdigest in an interview that the bank was restructuring its operations based on a new strategic turnaround programme.
He said the restructuring included rationalising and consolidating operations and assessing and realigning skills relevant to the requirements and needs of the bank.
“One of the key strategies of our revival and turnaround programme is to aggressively grow our deposit base from existing and new clients,” he said.
“We want to not only regain our market leadership position but also ensure a steady growth in market share of retail deposits.”
Magwada said his major task at the bank was to restore bank liquidity through aggressive deposit mobilisation and strengthening the capital base, and restoring customer and stakeholder confidence in the bank.
“This will be achieved through a number of initiatives that include review of our structures, revamping systems and procedures, implementation of the management information systems, focusing on prudent lending, application of best practices in asset and liability management and also reorient our staff to the new strategic direction that we are pursuing and implementing,” he said.