The Sunday Mail
A ZAMBIAN investor is understood to be hovering over the assets of AfrAsia Zimbabwe Holdings Limited with the hope of investing US$30 million that will help resuscitate part of its operations.
The Reserve Bank of Zimbabwe cancelled AfrAsia’s banking licence on February 24 due to undercapitalisation and attendant problems.
At the time of its closure, AfrAsia was pursuing various capital-raising initiatives, including courting potential investors and jointly marketing a Medium-Term Secured Note with Imara Capital Finance that was expected to raise an incremental US$15 million.
RBZ Governor Dr John Mangudya said AfrAsia had core capital levels of US$6,01 million as at December 31, 2014 against a minimum capital requirement of US$25 million.
So dire was the situation that depositors were forced to withdraw as little as US$20 per day while in some instances they would not get anything.
Before AfrAsia’s closure, the local banking sector had gone down to 19 operating institutions comprising 14 commercial banks, one merchant bank, three building societies and one savings bank. Thirteen of the 19 operating banking institutions were in compliance with the prescribed minimum core capital requirements as at December 31, 201,4 with one bank having already surpassed the US$100 million minimum capital requirement for the Tier 1 strategic group which is effective in 2020, while four have capital levels above US$50 million.
The central bank is monitoring banking institutions that are not compliant with minimum capital requirements. Since AfrAsia closed, various names of potential investors have been thrown around.
But it has since been established that the Finance Bank Zambia Limited (FBZ) is one of the suitors angling for a share of the collapsed bank.
FBZ was previously linked to another struggling entity, Tetrad Investment Bank, but the deal fell through under unclear circumstances.
Sources familiar with developments told The Sunday Mail Business last week that FBZ first made inquiries last year and even conducted a due diligence of the Zimbabwean lender.
“No one really knows what became of the transaction when the guys came last year after frequently visiting the country. However, we are made to believe that after the cancellation of the bank’s licence this year, the Zambian guys came back and engaged RBZ officials but the nature of their discussions remains unknown,” said the source.
If the FBZ wins the bid to invest in AfrAsia, it will bring with it a huge baggage. The bank’s chairman, Dr Rajan Mahtani, is not a stranger to controversy. Dr Mahtani was once accused of bribing ex-Malawi president Joyce Banda to get access to that country’s banking sector.
He has categorically denied the accusations. In December 2010, the Bank of Zambia, the national banking regulator, seized FBZ citing illegal activity – including insider loans – by the bank’s shareholders, directors, management and senior staff. The central bank fired the bank’s board of directors and entire management team and was only brought back to life in October 2011 by then new president Mr Michael Sata.
AfrAsia chief executive officer Mrs Lynn Mukonoweshuro referred questions to the Reserve Bank.
“Yes, but may I kindly ask you to get more information from the RBZ,” said Mrs Mukonoweshuro last week.
RBZ Governor Dr John Mangudya said six investors were angling for a stake in AfrAsia micro-lending arm, MicroKing Finance. “What we can confirm is that there are investors who are keen to invest into MicroKing Finance, not AfrAsia; that we can confirm. I cannot confirm the amount (involved) but there are six investors wanting to invest into MicroKing and that is consistent with our public notice,” said Dr Mangudya.
He would not reveal the potential investors’ identities saying they would have to be subjected to the board which will select suitable candidates.
Earlier, the market rumour was that MicroKing had been sold for US$8 million with officials understood to be ready to accept that little — though they would prefer as much as US$15 million — for the unit. Sources say the potential investors intend to transform MicroKing Finance into a deposit-taking entity. The investors have informed the RBZ of their intention and Dr Mangudya confirmed the development.
“That is what the prospective investors have said,” he said.
MicroKing was not put under provisional liquidation when AfrAsia lost its licence; hence, the frantic efforts to find an investor to save investor funds.
Finance Minister Patrick Chinamasa recently said Government would do everything to salvage MicroKing, which was put up for sale by AfrAsia Bank Limited of Mauritius as it sought to boost liquidity in AZHL.
Dr Mangudya has said AfrAsia Zimbabwe could still recover its licence if it got an investor in about two months since it remains under provisional liquidation. If the bank bounces back, it will bring relief to about 400 employees who have not been paid their salaries since October 2014.
