HomeBusiness DigestWe have a sound capital base –– CFX

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CFX Bank says it now has a solid and sound capital base to harness offshore credit lines necessary to enhance business underwriting capacity while at the same time complying with regulatory capital requirements.

This follows a US$10 million capital injection into the bank through a renounceable rights offer last November.
Bank managing director Emmanuel Tagarira on Wednesday told businessdigest that the financial institution was now poised for growth following the injection of fresh capital and the partnership with Interfin Holdings, which underwrote the rights offer.
“This recapitalisation exercise has, therefore, been vital not only in terms of compliance with regulatory requirements but is helping to strategically reposition the bank in the new environment,” said Tagarira.
Interfin Holdings is now the major shareholder in CFX Bank with a 51% stake and Tagarira said the US$10 million capital injection was the fillip the institution needed to grow its market share.
Tagarira said there were “vast opportunities in the banking sector cascading from the ongoing economic recovery and the recapitalisation was pivotal in ensuring that the bank consolidates its niché position by offering increased customer convenience riding on a robust electronic banking platform.”
Tagarira said a significant portion of the capital would be directed to underwrite leasing business which is set to increase with economic recovery as various sectors retool their operations.
“The bank’s prospects will be underpinned by a strong balance sheet to underwrite the huge funding needs in the economy,” he said.
He said the financial resources available to the bank were sufficient to meet working capital needs and liquidity requirements in the foreseeable future.
“The strategy going forward is to increase the contribution of non-funded income to total income and to reinforce the ongoing cost-containment measures. In addition, offshore lines of credit will be vigorously pursued on the back of a strong capital base to increase the bank’s business underwriting capacity,” Tagarira said.
The success of the rights offer saved the bank from imminent collapse as it was on the verge of insolvency due to capital inadequacy.
The recapitalisation exercise was made possible after registered holders of CFX ordinary shares gave their thumbs up to the bank’s proposal to raise US$10 063 667 by way of a renounceable rights offer.
The transaction was fully underwritten by Interfin Holdings in terms of a written underwriting agreement signed between CFX and Interfin on October 23 last year.
CFX Bank Limited is a registered commercial bank, while Interfin is the former holding company of Interfin Merchant Bank Limited, Altfin Holdings, Interfin Securities and many other companies.
After the unbundling exercise that occurred in the Interfin Group, Interfin Holdings is now an investment holding company. –– Staff Writer.

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