Botswana firm eyes US$11m Trust Bank assets

BOTSWANA private equity firm Capital Seven plans to buy the remaining assets of Trust Bank Limited for an estimated US$11 million.

The bank closed on December 6, 2013 and is presently under liquidation. It is believed Trust Bank shareholders recently indicated to the liquidator – the Deposit Protection Corporation (DPC) – they had found a suitor for the outstanding assets.

DPC could not be drawn into discussing details of the potential investor, but the liquidator’s report seen by The Sunday Mail Business says the investor has proposed two options for the acquisition of the bank’s assets so far.

“The shareholders of Trust Holdings Limited (THL) approached the liquidator through an intermediary advising that they have identified an investor who is willing to inject funds into the Holding Company on condition the funds would be used to acquire the remaining assets of Trust Bank Corporation.

“The investor offered two options . . . US$10 988 635 for the total assets (or) US$7 460 874 for non-liquid assets,” reads the liquidator’s report.

DPC has since asked for proof of funds from the suitor after which it will evaluate the offer.

Capital Seven group chairman Mr Nobert Mavunga, who is based in Zimbabwe, could not be reached for comment. About 42,6 percent of the insured depositors have received statutory payments of US$500 each. The fee has since been increased to US$1000. Accepted claims from creditors stood at US$9 million as at December 31, 2016, against US$4,6 million that has been raised. More claims are however still being made.

In a recent interview, DPC chief executive officer Mr John Chikura said they were struggling to recover Trust Bank’s assets. Capital Seven was last year linked with the acquisition of a 75 percent stake in Trust Holdings for US$25 million.

However, the deal fell through after it emerged it was impossible to acquire a bank whose licence had already been withdrawn by the Reserve Bank of Zimbabwe. Capital Bank was subsequently given the option to acquire Trust Bank’s assets, if it so wished, and apply for a banking licence at the appropriate time.

Trust Bank has suffered the ignominy of having part of its assets, including vehicles, auctioned last year in order to raise funds to repay depositors. Capital Seven provides advisory services and private equity opportunities in Botswana and other African markets. The business plans to list on the Botswana Stock Exchange by next year.

A listing on the London Stock Exchange is planned by 2020. The deal to dispose Trust Bank assets comes after the successful acquisition of AfrAsia Bank Zimbabwe Limited’s subsidiary – AfrAsia Capital Managers – by Smartvest Wealth Managers (Private) Limited (Smartvest).

AfrAsia Capital Managers was acquired through a scheme of arrangement sanctioned by the High Court in October 2015. Similarly, MicroKing Finance Limited, which was AfrAsia Bank’s microfinance firm, was also acquired by two French firms – Microred Group and AfricInvest Finance Sector Fund – in a US$3 million deal. Mr Chikura said selling assets of banks in liquidation is part of measures adopted to speed up the payment of depositors affected by the closure of their banks.

The DPC has struggling to generate the money need to liquidate obligations owed to creditors. More than US$10 million is needed to pay Trust Bank’s depositors.

It is now more than three years since the bank closed but only a mere US$4,6 million has raised as at December 31 last year. But the claim the claims are still growing.

On Tuesday, the National Social Security Authority (NSSA) filed a US$4 million claim, while several other creditors followed suit.

To date, only 42,6 percent of insured deposits – those belonging to vulnerable account holders who are entitled at law to receive at least US$1 000 – have been paid.

Trust Bank’s gross loan book currently stands at more than US$18 million. Pinning down the assets that have to be sold in order to get the required amounts is proving to be difficult.

For example, the DPC is having difficulties recovering 11 cars belonging to Trust Bank, seven of which are reportedly with former employees. Lawyers have since been engaged to collect the cars on behalf of the liquidator.

It is not only Trust Bank creditors who are fretting. Creditors of the other six banks — Allied Bank, AfrAsia Bank Limited, Interfin Bank, Tetrad Investment Bank, Genesis, and Royal Bank — shut by the Reserve Bank of Zimbabwe (RBZ) since 2012 are also feeling the pinch.

Overall, central bank statistics show that depositors lost more than US$209 million in the failed banks. In Allied Bank, for example, the DPC has only managed to recover US$1 million to cover claims worth US$15,7 million. Allied Bank was closed in January 8, 2015.

It will take nothing short of a Herculian task for the same liquidator to pay more than US$61 million that is provisionally owed to AfrAsia Bank creditors after the bank surrendered its licence on February 24, 2015. Only US$4,8 million — US$2,9 million to preferred creditors such as NSSA, Zimra and Zimdef; and US$1,9 million to secured depositors — has been paid. Preferred creditors are those that get a preferential right to payment upon then debtor’s bankruptcy under applicable insolvency laws.

If the DPC’s task in AfrAsia seems difficult, it is almost impossible for Interfin Bank.

At the time Interfin Bank closed in 2014, it owed depositors more than US$139 million.

But by December 31, 2016, the DPC had managed to pay creditors US$248 000, while preferred creditors got US$521 000. Prospects of recovering meaningful amounts from a loan book that stands at US$167,3 million are doubtful as more than US$91 million is owed by the bank’s former executives and directors.

However, there is still hope for Tetrad Investment Bank which is under judicial management.

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