The Sunday Mail
Mulls offloading MicroKing
Ex BancABC boss linked with top job
HEAD honchos from AfrAsia, the Mauritian-based parent company of AfrAsia Zimbabwe Holdings Limited, were in the country last week to try to pull the local unit from the precipice, with strong indications that a US$10 million cash injection will be made into the lender in the short term.
Sources familiar with the latest development at the bank said last week increased concern over the health of the business had prompted the shareholder to consider sweeping reforms that might include roping in a new managing director, disposing MicroKing in order to defray short-term obligations, and a cash injection to revitalise the business.
In recent months, AfrAsia Zimbabwe has borne the brunt of irate depositors who queue at banking halls for hours only to get US$50 — the cap on daily withdrawals — with reports from Bulawayo suggesting customers spend nights in lines waiting to get their money, while officials at Harare’s First Street branch had to call anti-riot police to disperse angry clients demonstrating inside the banking hall a fortnight ago.
It has emerged that AfrAsia, as the major shareholder, will soon avail US$10 million to stabilise the business.
“Two top officials from Mauritius are in the country this week (last week) to see for themselves the problems the bank is facing. As you would know, depositors have been seething since they cannot get the amount of money they want to withdraw because we introduced withdrawal limits.
“So, the coming in of these senior officials has brought some relief to employees and probably our clients since the parent company is bringing in US$10 million as liquidity support in the near future.
“Some employees were briefed on Friday October 11, 2014 of the impending US$10 million liquidity support to the bank,” said an official from the bank who elected to remain anonymous.
Sources further said management was mulling disposing MicroKing Finance for an estimated US$10 million to enable it to part-pay arrears in respect of Real Time Gross Settlement (RTGS).
It is understood that AfrAsia has struggled to process RTGS payments worth US$13,6 million as at October 10, 2014 since May this year.
Interestingly, the bank is believed to be keen to rope in former BancABC MD Mr Hashmon Matemera, who has been seen on a number of occasions at the bank’s head office.
Sources are convinced he has landed the job that was left vacant by the unceremonious departure of Mr Tineyi Mawocha, after a three-month stint.
AfrAsia Zimbabwe’s marketing and public relations executive Ms Sekai Chitemerere could neither confirm nor deny the reports but admitted that the Mauritian bosses, who included AfrAsia chief executive officer Mr James Benoit, were in town.
“AfrAsia Bank Limited (ABL) Mauritius, as the major shareholder of AfrAsia Zimbabwe Holdings Limited, is regularly in Zimbabwe to assist its operations on an on-going basis. ABL has reiterated its commitment to the business in Zimbabwe and the long-term future of the country.
“Working closely with the regulatory authorities, various options are currently being explored by both AZHL and ABL to address the current liquidity challenges facing AfrAsia Bank Zimbabwe Limited.
“Stakeholders will be updated when there are material developments … The group will continuously monitor progress and remains ready to respond to any emerging challenges and opportunities in the economy…
“The bank is finalising the recruitment process of a substantive managing director and when all is done to the satisfaction of all key stakeholders, a market announcement will be made,” she said.
AfrAsia Zimbabwe negatively weighed on the performance of the parent company last year.
The Mauritian-based bank indicated in its 2013 annual financial report that its results were subdued by “negative returns from its investment made in Zimbabwe through its associate AfrAsia Kingdom (Zimbabwe) Limited,” said Ms Chitemerere.
She also claimed that AfrAsia Zimbabwe has not yet made a decision to sell MicroKing Finance “and should this be logical to the group in line with the on-going review of its operations in response to the economic and operating environment, stakeholders will be kept updated”.
AfrAsia Zimbabwe is a financial services business carved out of businessman Mr Nigel Chanakira’s former empire by a group of Mauritian-based investors.
It has been battling to play a meaningful role in the financial services sector owing to the obtaining treacherous economic conditions punctuated by illiquidity and crumbling capacity utilisation in the manufacturing sector.
Due to the predicament it faces, AfrAsia Zimbabwe has scaled down its branch network by shutting down five branches in Ruwa, Chitungwiza, Newlands (Harare), Belmont (Bulawayo) and Victoria Falls.
The bank has also shed more than 90 jobs so far and more employees will face the chop as the bank seeks to rationalise its wobbly operations.
Market watchers say the banking giant is failing to hold its own in a highly volatile market plagued by low depositor confidence and a high loan default rate.
NPLs have risen from 15,9 percent as at December 31, 2013 to 18,5 percent as at June 30, 2014, exceeding the five percent international benchmark.
Earlier this year, the bank advised its depositors, who have been failing to access their money, to use ZimSwitch-enabled Point of Sale devices or the internet banking platform.
Analysts say AfrAsia Zimbabwe’s misfortunes developed from a deliquent US$21 million loan that was extended to former Econet Nigeria boss and chief executive officer of local firm Spiritage, Mr Zachary Wazara.
The fallout between the businessman and the bank prompted the former to write a letter to the central bank accusing the latter of trying to conceal souring loans on its books.
The letter claimed the lender, through its special purpose vehicle Lalela Trading, had subsequently entered into a debt-to-equity arrangement to acquire 80 percent of Valley Technologies – a subsidiary of Spiritage – after the mobile operator failed to settle its obligations to the bank.
Mr Wazara claims the bank undertook to eventually offload the shares to a Chinese company, but chose to foreclose. The feud has since spilled into the courts.
However, observers say the debacle surrounding the loan spoiled the relationship that existed between Mr Chanakira, who held a 35 percent stake in the then AfrAsia Kingdom Bank, and the new group of investors who resultantly bought him out of the business for US$12,5 million.
While Mr Chanikira previously said he decided to exit the business because he feared the spectre of being diluted into a minority shareholder in the bank he established 20 years ago, in December last year he reportedly said he sold the business because “it was no longer excelling”.
Meanwhile, AfrAsia has heightened its drive to significantly slash its labour-force to contain ballooning operational costs. It could not be established how many jobs would be shed but about 90 employees have so far been retrenched.
Said Ms Chitemerere: “AfrAsia Zimbabwe Holdings Limited (AZHL) has already embarked on a major rationalisation programme aimed at stabilising the business whilst focusing on cost containment.”
It blamed the poor performance squarely on non-performing loans and noted that a restructuring at shareholder, board and management levels had been initiated together with a capital-raising exercise to turn around the business.
Market watchers had said it was highly unlikely that AfrAsia would collapse as it has deep-pocketed shareholders who can support the business.
The banking group, which had US$7,94 million capital as at September 2013 against an expected base of US$25 million, recently reported that its US$5 million rights issue had been fully subscribed.
Most significantly, AfrAsia Bank followed its rights. The rights issue is part of a phased capital-raising plan to boost the group’s balance sheet.
The first phase of the plan was to raise US$20 million split into a rights issue of US$5 million and a private placement of shares to raise US$15 million.
Ultimately, the bank intends to raise US$100 million to make it one of the top five banks in the short to medium-term.
