National Social Security Authority (Nssa) was attracted to Renaissance Merchant Bank (RMB) to access Afre Corporation (now First Mutual Holdings Ltd)’s property portfolio, and not the bank per se, well-placed sources say.
A source close to Nssa said the fund was interested in snapping up First Mutual’s vast property portfolio tentatively valued at over US$200 million and not the troubled bank itself.
“Nssa bought RMB as a stepping stone to Afre,” said the source. “It’s still a very good investment. Look at the property portfolio.”
But another source discounted the claim that Nssa went into RMB for its 33% equity stake in financial services concern for its property portfolio, adding the fund was committed to rescuing the bank, but had almost given up on the investment because former RMB boss and shareholder Patterson Timba was sabotaging capital raising plans.
“There are other shareholders still causing problems at Capital Bank who claim ownership of the bank. They do not want to participate in a capital raise and this is frustrating the recovery of the bank. They also do not attend annual general meetings where very important decisions are made,” the source said.
Timba, sources said, felt he was stampeded by Nssa into selling RMB, in which he, together with partners Dunmore Kundishora and Clementine Sibve, had a controlling stake.
The sources added that Timba has written several letters to government departments complaining about how the deal was structured by Nssa to muscle him out, a move the main shareholder finds hostile.
Timba was not available for comment.
This comes after it emerged Nssa had sought the nod from the Reserve Bank of Zimbabwe (RBZ) to wind up Capital Bank and start a micro-finance bank.
Under statutory regulations of 2012, micro-finance institutions must have US$5 million in capital.
The fund, which has sunk a total of US$48 million into Capital Bank, has held several meetings with the RBZ since October 24 when the bank filed with the RBZ for approval to wind up.
Nssa, which administers social security public funds on behalf of about 1,3 million contributors and pensioners, has held separate meetings with the RBZ since October.
Capital Bank MD Lawrence Tamayi said the issue was being delayed at a shareholder level.
He said: “This is an issue that needs to be dealt with at a shareholder level. Shareholders must resolve the disagreements they have over the ownership of the bank to ensure the customers’ interests are safeguarded.”
Analysts say it defies economic sense for Nssa to exit now after committing US$48 million. Bank managers argued that it was best to preserve the US$30 million Nssa investment in the bank by recapitalising it rather than Nssa writing off US$48 million as loss arising from discontinued operations.
Information gathered by businessdigest shows that Nssa could have written off its US$12,5 million held in deposits.
This comes after efforts to convert the US$12 million deposit into a long-term loan, which could be recovered from collections from unsecured non-performing loans over the next three years.
According to an internal Capital Bank circular seen by this paper, various options such as a US$22 million capital injection would help the bank turnaround without further capital calls to shareholders.
An injection of US$22 million would see the bank meet the capital requirements of a micro-finance bank, namely US$5 million.
Nssa has been playing lender-of-last-resort in the market, providing long-term deposits to banks and some of its investments have not performed to expectations.
Nssa in February 2012 completed the acquisition of RMB and emerged with a 52% equity stake in Afre.