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FBC dumps merger plans

FBC Holdings Ltd will not merge its banking division, FBC Bank, with its mortgage unit, FBC Building Society, anymore after the central bank last week extended statutory capital requirements by another six years, a top official said.

Staff Writer

FBC Holdings CEO John Mushayavanhu told businessdigest last week on the sidelines of the Reserve Bank of Zimbabwe monetary policy statement that his group is no longer pursuing the merger of the two units, adding the group had also abandoned the disposal of its equity stake in Turnall Holdings.

Mushayavanhu was optimistic his group would be able to raise the funds through normal trading.

“We now have up to 2020 to comply. Through normal trading, we can raise that money,” he said.

On Turnall, Mushayavanhu said: “Its not necessary to sell Turnal anymore.”
The merger would have increased National Social Security Authority (Nssa)’s shareholding in the holding company to 35,13% from the current 13,53% equity stake.

FBC Bank and FBC Building Society have a combined capital base of US$63 million. The holding company owns 60% equity stake in FBC Building Society, while Nssa owns the remainder.

In 2012, then RBZ governor Gideon Gono raised statutory capital requirements for commercial banks from US$12,5 million to US$100 million.

Merchant banks were supposed to raise US$100 million, building societies US$80 million, finance houses US$60 million and micro-finance banks US$5 million by June 2014. But the decision was reversed by acting central bank governor Charity Dhliwayo in her monetary policy statement.

Several banks had been struggling to raise capital, prompting most banks to court foreign investors and being diluted.

FBC Holdings announced plans to merge its banking division with the building society in a bid to meet the new minimum capital requirements.

As part of raising capital, the group had proposed to sell its 58% equity stake in Turnall. Going by this week’s market capitalisation of Turnall of US$24 million, FBC would have realised US$15 million from the sale of its equity.

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