Tuesday, March 15, 2011
By Chiwoyu Sinyangwe
Tue 15 Mar. 2011, 04:00 CAT
SWISS financial giant Credit Suisse has told BoZ that it might use legal means to prevent its 40 per cent equity from being absorbed in the plans to sell Finance Bank away from its shareholders. And Finance Bank's value has plummeted from US $200 million in 2008 to mere pittance, Bank of Zambia (BoZ) told Credit Suisse.
According to sources within BoZ, Credit Suisse officials Christopher Corson and Markus Niemeier told the Central Bank that allegations of insider lending advanced for the alleged forcible takeover of Finance Bank were not beyond the capacity of the international financial institution to handle.
Credit Suisse, in 2008, bought a 40 per cent stake in Finance Bank in a strategic decision in which the Swiss bank was supposed to lead future expansion programmes for Finance Bank, which included opening branches in Zimbabwe and the Democratic Republic of Congo.
Credit Suisse said they would do everything within their means to ensure their stake in Finance Bank was not absorbed or diluted in the sale of the bank in a Purchase and Assumption Transaction in which South Africa's First Rand Merchant Bank is the favoured buyer.
“They told Bank of Zambia that they will do everything to protect their interest in Finance Bank from being absorbed,” the sources said.
“They don't agree with the roadmap taken by the Bank of Zambia to sell Finance Bank, and that if worst comes to worst, they will use both local and international legal means to stop the transaction.”
Credit Suisse lawyers in London, D.L Piper, have since appointed Chibesakunda & Co to represent it in protecting its stake in Finance Bank.
“They basically told the Bank of Zambia that the management problems they advanced for the takeover of Finance Bank did not warrant the move,” the sources said.
“And they also contended that since they Credit Suisse own 40 per cent in Finance Bank, at least, they should have been informed of the move to take over the bank. And besides, they said they have the capacity to institute the changes at management to correct whatever wrongs were allegedly happening at the bank and to meet any capital adequacy requirements”
In response, BoZ told the two officials that Credit Suisse should put its concerns in writing and address them to the director of bank supervision by March 17, 2011 at 17: 00 hours.
And sources said Credit Suisse officials were surprised when BoZ told them the value of Finance Bank, which had been declared “solvent,” had plummeted from US $200 million to a mere pittance.
“They were surprised when BoZ informed about the current value of Finance because that drop in value is so huge, and they were wondering on what basis Bank of Zambia arrived at when stating the net value of the bank,” said the sources.
The duo has since flown back to Europe.
As part of the strategic role, Finance Bank was also expected to spearhead the dual listing of Finance Bank both on the Lusaka Stock Exchange and Johannesburg Stock Exchange.
Finance Bank also intended to raise K500 billion in a bond issue which was expected to be done before listing on the Lusaka bourse.
The sources said First Rand Merchant Bank which trades locally as First National Bank (FNB) was scheduled to take over Finance Bank once the process of its sale was completed.
Last December, BoZ single-sourced managers from First Rand Merchant Bank of South Africa to manage the 39 branches of Finance Bank in the country and its workers, circa 1,000.