Nedcor courts Trust


Staff Writer

SOUTH Africa’s cash-rich Nedcor Investments yesterday confirmed it was entering into formal talks about a merger with the once troubled Trust Banking Corporation Ltd (Trust).
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Trust shares have since shot up from $30 to $36 as investors position themselves for a possible windfall when the deal goes through.


On Wednesday Trust shares closed at $34 while Nedcor, which is listed on the Johannesburg Stock Exchange, ended at R61,50 on Tuesday, before a holiday on Wednesday for the South African general election.


The billion-dollar deal involves the Nedcor unit, Nedbank, Trust with the Merchant Bank of Central Africa (MBCA) which is indirectly majority-owned by Nedbank and Old Mutual Zimbabwe.


“While Nedcor’s main focus continues to be on its South African banking operations, its strategy includes building a strong base throughout southern Africa,” Nedcor said yesterday. “This makes it an ideal opportunity for Nedcor to expand its operation in Zimbabwe at a relatively low cost.”


The alliance comes hardly two weeks after Reserve Bank of Zimbabwe governor Gideon Gono gave a glowing report about Trust which had faced collapse.


In giving an account of the status of troubled banks, Gono said Trust had made commendable progress since the issuance of its corrective order.


Trust was issued with a corrective order on January 13 after it was determined that it was in an unsafe and unsound condition and requiring huge liquidity support for survival.


“The size of its depositor base, especially the small and vulnerable ones spread across the country were factors taken into account in efforts to save the institution,” Gono said. “The bank has made commendable progress since the issuance of that corrective order. Trust Bank appointed Mr Dominic Magwada as its new managing director with effect from March 15. The board, its committees and management have also been extensively restructured and strengthened.”


Magwada told businessdigest in an interview that he would “stop the rot” at the bank.


He said his major tasks at Trust were to restore bank liquidity through aggressive deposit mobilisation and strengthening the bank’s capital base with the help of key shareholders.