FRESH revelations have emerged, detailing how CBZ Holdings’ ambitious bid to create Zimbabwe’s largest financial services conglomerate, an entity that would have commanded assets exceeding US$2,5 billion, collapsed under the weight of stringent regulatory conditions.
The proposed multi-institution merger, involving CBZ Holdings, ZB Financial Holdings (ZBFH), First Mutual Holdings Limited (FMHL), and First Mutual Properties (FMP), was intended to reshape the financial sector through complex financial engineering and substantial capital investment.
However, the plan ultimately fell apart earlier this year after CBZ Holdings rejected the Competition and Tariff Commission (CTC)’s conditions, which the group deemed excessively restrictive.
At the heart of the deal was CBZ’s strategy to secure a controlling 51% stake in ZBFH, beginning with the acquisition of a 4,95% share from Chappo Investments and Tracetory Investments.
This move aligned with the group’s broader diversification and consolidation goals and would have triggered a mandatory offer to minority shareholders in compliance with the Companies and Other Business Entities Act (COBE) and local listing requirements.
Yet, documents reviewed by the Independent reveal that the regulator raised serious competition concerns.
In the reinsurance sector, combining First Mutual Re and ZB Re was viewed as problematic, as ZB Re plays a vital role in helping local insurers manage risk.
Its integration into a rival structure was seen as reducing market diversity and increasing concentration risk.
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Similar concerns arose in the property sector, where the merger would have placed two major players — Mashonaland Holdings and another large entity — under the shared ownership of FBCHL and CBZHL.
Regulators feared this would lead to reduced competition and the potential for collusion, particularly in the development and management of property assets.
“There is a need for a remedy to deal with the potential collusion," the report reads in part.
“Customers in the banking market viewed the merging of the two banks as potentially disadvantageous to some extent as they were deriving different benefits from the two banks while they were independent.
“The government was also viewed as one of the key banking customers who preferred to use the merging banks but mostly CBZ, directing all passport payments to CBZ was viewed as anti-competitive behaviour, which could spill over into other markets if the merger is allowed.”
The assessment treated CBZHL and FMHL as a single entity for analytical purposes, and it found anti-competitive risks across the banking, reinsurance, property, and healthcare markets.
It also flagged the possibility of collusion between CBZHL and FBCHL through their joint interests in Mashonaland Holdings, which could distort fair competition.
“Post-CBZHL/FMHL merger, CBZHL has moved its portfolio from Cimas medical aid to First Mutual and there are fears that this could also happen with ZBFHL if the merger is allowed,” the document states.
“For the life business, stakeholders consulted were of the opinion that the government should desist from directing business to a specific player as this is anti-competitive.”
The report recommended approval only if ZBFHL and its affiliates divested from Mashonaland Holdings, ZB Reinsurance and Cell Insurance within 12 months.
Additional conditions required CBZHL and ZBFHL to maintain separate CBZ and ZB banking brands, obtain Commission consent before moving any insurance portfolios, and notify the Commission of any further share acquisitions beyond 4,95%.
Employment protections stipulated that “for a period of 24 months from the date of approval, the merged entity shall not terminate any employment contract as a result of the merger, except for positions at senior management level” .
This excluded voluntary separations, agreed departures, early retirements, operational requirements unrelated to the merger, or performance-related dismissals.
The analysis treated CBZHL and FMHL as one entity, identifying competition concerns across banking, reinsurance, property, and healthcare markets.
The report noted the merger could enable collusion between FBCHL and the merged entity through their shared Mashonaland Holdings stake.
CBZHL had previously acquired an additional 1,9% stake in FMHL from Quant Africa Wealth Management, pursuing its strategy to increase holdings despite competition concerns.
The report pointed to further risks such as “input foreclosure, where FMHL’s insurance funds could be exclusively channelled to CBZ Bank, reinforcing its dominant market position.
“Market foreclosure was also considered likely," the document states, with the merged entity potentially keeping profitable business while offloading riskier portfolios to competitors.
Concerns about potential conflicts of interest arising from the presence of the National Social Security Authority (Nssa) as a shareholder were raised, noting that board cross-appointments across CBZHL, FMHL, and Nssa could compromise the integrity of confidential financial information.
“The government, which is one of CBZHL's shareholders, has also been viewed by stakeholders as offering preferential treatment to CBZHL, especially the bank,” the document states.
Final recommendations required CBZHL to maintain only its initially approved 31,22% FMHL stake and dispose of the additional 1,9%, while barring board appointments between CBZHL, FMHL and Nssa.
The report also proposed engaging the Ministry of Finance to advocate for fairer business allocation among banks.
