Bank of Zambia officially reverses the sale of Finance Bank
TIME PUBLISHED - Friday, October 7, 2011, 2:57 pm
Bank of Zambia has officially reversed the $5.4 million sale of Finance Bank to South Africa’s FirstRand on today, returning the bank to its previous shareholders.
The move was expected after newly elected President Michael Sata said this week he would stop the sale of Finance Bank to South Africa’s second-largest lender, in his latest move against the policies of the previous administration.
The central bank seized Finance Bank from its shareholders in 2010 for legal violations, including insider lending. Finance Bank’s chairman has said the seizure was politically motivated.
The Bank of Zambia said in a statement that Finance Bank had been handed back to previous shareholders as of today , and that it would continue normal operations.
[Reuters]
Labels: BOZ, FINANCE BANK, FIRST RAND GROUP
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Sale of FBZ saddens Mahtani
By Amos Malupenga
Fri 16 Sep. 2011, 13:55 CAT
DR Rajan Mahtani yesterday said he is saddened to read about the government's sale of Finance Bank, the bank he struggled to build for over 20 years with other stakeholders.
And Finance Bank Zambia (FBZ) employees have expressed displeasure at the bank's new owner, South Africa's First National Bank (FNB), decision to force them to resign and re-apply for jobs without getting their redundancy packages for the many years they worked.
In an interview from Johannesburg where he has been recuperating after undergoing open-heart surgery over a month ago, Dr Mahtani, a former Finance Bank executive chairman, said he had decided to return home against the doctors' advice because he wants to continue his legal battles and prove his innocence. He said no matter how long it would take, the truth about Finance Bank will eventually come out.
"Contrary to the advice of the physicians and specialists who insist on my recuperating for eight weeks after surgery in Johannesburg, I have decided to return to Zambia and recuperate at home instead (in the fervent prayer that there would be no complications)," Dr Mahtani said.
"This will give me the opportunity of continuing the legal battles to prove my innocence to the many allegations made against me and to regain my integrity and dignity. I believe in the rule of law in Zambia and the judiciary's ability to maintain the highest ethics in the legal profession.
"I am indeed saddened to read about the sale of Finance Bank Zambia Limited which took twenty three years to establish through the hard work and dedication of all stakeholders and the employees who built a Zambian institution of pride and to whom I salute with gratitude. These matters are in court and since that makes it subjudice, I will refrain from expressing my sentiments except to assure my colleagues that ‘truth and justice will finally prevail' and that is a Biblical principle."
Dr Mahtani said he was grateful for the mercy and grace of Jesus Christ, the government of Zambia, the churches, the staff at Care for Business in Lusaka and the University Teaching Hospital, all friends and family for the support, prayers, and kindness during his ordeal of a major cardiac open heart surgery.
The surgery consisted of a quintuple coronary artery by pass grafting following his heart attack in Zambia.
"It is sad that this medical condition could have been avoided had I been allowed to seek medical reviews on a regular basis," Dr Mahtani, who was expected in Lusaka last evening, said. And over 1,000 FBZ employees are affected without government's intervention forthcoming.
According to sources at the bank, FNB officials addressed the workers on Wednesday where they told the workers to resign.
"FNB announced during a meeting at Mulungushi International Conference in Lusaka that the only way they could accept to employ us under FNB was if we could write letters to resign our positions under Finance Bank," the source said.
"But workers feel aggrieved because most of them had no plans of resigning, perhaps throughout their work career. It's very unfair for First National Bank to run away from its obligations of paying us our benefits. This situation was not caused by the workers, so there is no way we can lose our benefits which we have worked for, for as long as Finance Bank has been in existence. Some of us have worked for up to 20 years."
The sources said the government had not disclosed the details of the sale of FBZ to FNB and how it would affect the workers.
The sources said the government had not even met the workers to address their problems, particularly the resignation and reapplication process.
"According to a bit of knowledge we have is that labour laws in Zambia do not allow someone to move from one employment to another, like it is happening with FBZ and FNB, without the involvement of the union and the labour commissioner," the sources said.
"Workers don't even know their future under this circumstance. We need to understand the nature of transaction and how it affects us. FNB asked the workers to resign and accept new employment. But the workers are asking, ‘what about the years we have worked? Where are our benefits?' Let FNB declare us redundant or put us on early retirement and then pay us our money after which we decide whether to take up the job offers they are giving us or not."
The sources said FNB was only ready to pay leave days to workers, which was unfair to the employees.
"They are asking us to resign from an organisation that had conditions of services and that we should join an organisation without a signed collective agreement…no signed conditions of services, it's like verbal agreement."
The sources explained that throughout the period, December 2010 to date, workers had not been given a salary increment because the Bank of Zambia (BoZ) refused to do so under the pretext that the FBZ was under repossession.
BoZ this week announced the sale of FBZ to FNB for about K27 billion.
Labels: FINANCE BANK, FIRST RAND GROUP, RAJAN MAHTANI
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COMMENT - Another question is - what did First Rand do to get this bargain? Is any company in Zambia at risk of government seizure and sale to a foreign competitor, or just the ones suspected of financial ties to the political opposition? Or when it is election time?
Sale of FBZ will be reversed next week - Nawakwi
By Chiwoyu Sinyangwe
Thu 15 Sep. 2011, 13:55 CAT
FIRSTRAND is risking its money by buying Finance Bank Zambia Limited as the "haste" transaction will be reversed next week when a new government takes over, says Edith Nawakwi.
And Nawakwi has warned that some people close to the transaction may end up in prison for hastily selling FBZL even in the absence of a functioning Cabinet. FNB Zambia is a subsidiary of FirstRand, the bank whose top officials were appointed to manage FBZL after it was forcibly taken over by the Bank of Zambia (BoZ) last December.
FirstRand will operate all 34 branches and 16 agencies of Finance Bank, while the BoZ would continue to run its problematic assets, such as those which were currently under litigation, the central bank said.
Finance Bank has the largest rural network among Zambian commercial lenders.
Commenting on BoZ's decision to sell FBZL to First National Bank Zambia for K27 billion, Nawakwi said the transaction of the nature of FBZL only heightened locals' resentment of foreign capital and calls for nationalisation of foreign companies.
"This is complete mayhem and rubbish and I warn them that we will use uncle Robert Mugabe's tactics, and because of this, that is why you have leaders who are seen as anti-international investments," said Nawakwi, who is the president of Forum for Democracy and Development (FDD).
"No one is anti-international investments. We want the private sector to take root in this country. We want Zambians to participate fully for wealth creation of this country together."
Nawakwi wondered why government was so in a hurry to close the FBZL sale deal before elections next Tuesday.
"I take strong exception to selling an asset of this magnitude to a foreign company at the eve of an election. Caleb Fundanga should stop it because this is what makes people go to Chimbokaila Lusaka Central Prison," she said.
"What is the haste? It is just the civil service which is concluding this transaction? Since there is no Cabinet sitting, then who is making the decisions? Is it the one minister left there - President Rupiah Banda and this super minister of legal affairs ‘sir' George Kunda? You cannot behave in the manner they want to behave. FirstRand Bank should understand that this election is anybody's win. They should not comfort themselves to think that their friends are winning. They should understand that they are putting their money at risk."
Nawakwi said the whole transaction on FBZL, which was built with the toil and sweat of savings of ordinary Zambians, lacked prudence.
"They (FirstRand Bank) were the consultants; they cannot be the best bidders. We cannot ask a frog to empty its own pond," said Nawakwi.
"And the worst part of this transaction is that there is no government. Who has authorised this? I am so passionate about Zambian ownership and Zambian empowerments, for me I will reverse this sale."
Nawakwi, the sole female finance minister in Zambia's history, said if BoZ found that ex-FBZL shareholders led by Dr Rajan Mahtani had committed heinous banking offences, the bank should have been sold to Zambians.
"Even the Banda brothers President Banda's children are Zambians "if they do it legally, why not? We have super bankers here, Zambian ladies are managing these international banks, sure we can put a team together to manage Finance Bank on behalf of the Zambian savers and the wealth will remain here," said Nawakwi.
"You want to export our wealth to South Africa so that we continue printing our ballot papers in South Africa so that we continue going for cleaning our noses in South Africa… this is totally unacceptable, especially at the eve of an election. Tell all directors and everyone who is a shareholder in FirstRand Merchant Bank in no uncertain terms that this election is anybody's win and they should stop the transaction. And Caleb Fundanga, if he thinks he can conclude such a transaction without ministers in office, he should know that this is why many people end up in Chimbokaila."
Labels: EDITH NAWAKWI, FINANCE BANK, FIRST RAND GROUP, RAJAN MAHTANI
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Govt sells Finance Bank
By Chiwoyu Sinyangwe
Tue 13 Sep. 2011, 14:00 CAT
FINANCE Bank Zam-bia has been sold for K27 billion to First National Bank Zam-bia, a bank whose parent, FirstRand Limited provided top officers to run the bank after it was forcibly taken over by the Bank of Zambia last December.
Under the terms of the transaction, FNB Zambia was to take over about 96 per cent of the total assets of FBZL and the remaining - "toxic" assets of five loans worth K300 billion would remain with FBZ (under possession) to be administered by BoZ. With this acquisition, FNBZ would leap to become the fifth largest bank in the country from its current position where it is among the smallest.
Finance Bank was seized by the BoZ last year for allegedly breaching financial laws and was then managed by FirstRand. It has about 1,000 employees and 39 branches. FNB already operates in Zambia and has a presence in six other African countries excluding South Africa and Zambia.
BoZ director for bank supervision Lameck Zimba said FNB didn't want to acquire those which had some encumbrances and also excluded certain assets and liabilities which were still in court.
"The new buyer didn't want to acquire those which had some encumbrances, and also when we did an inspection, there was a lot of non-performing loans because there was a lot of insider lending and some of those assets are uncollectable," Zimba said during a media briefing yesterday.
"Taking that into account, the net asset value of Finance Bank at the time the due diligence was done, the net asset value was about K22 billion and then when you take into account those excluded related part advances, excluded first assets, also deferred taxes, you come to the fair value adjustment to treasury Bills and Government Bonds and then you come to the net asset value of K3 billion, and taking into account the intangible assests - goodwill valued...you find that the purchase price comes to K27 billion."
The value should not be looked at in isolation on its own. It has to factor in the fact that the whole set of liabilities which the institution is taking over. They are taking over a lot of liabilities. So you have to look at the net position of the institution after that you look at the asset and their quality, and the burden the institution taking over is taking And BoZ deputy governor for operations Dr Austin Mwape claimed that officers from FirstRand Bank did not influence the decision to award FBZL to FNBZ.
He said the deal was not "plain-sailing" for FirstRand as BoZ's financial advisors - London's Deloitte had helped to give advice on the competing interests which had been expressed which came from other competing banks.
"On the face value, one might have views that probably there was something wrong. The people who were managing Finance Bank Zambia Limited were engaged in their personal capacities and they were employed and reporting to the Central Bank," Dr Mwape claimed.
"To facilitate independence in determining the value, we engaged Deloitte LLP of London, a reputable accounting firm which we retained as our financial advisors in the consummation of the whole transaction. Even the offer that was given by FNB Zambia was subject to assessment by an independent accounting body which had a lot of experience in this matter, and it was only after they had given us the comfort that the value which was offered did meet the normal standards which any other bidder would have put through did we agree."
BoZ secretary said applications for injunctions by FBZL shareholders in the three cases before the courts of law had been dismissed, allowing BoZ to perform its statutory mandate.
Other institutions that expressed interest in acquiring Finance Bank included First Alliance Bank, Eximbank of Tanzania, I&M bank Limited from Kenya, JM Capital and Quantile Capital - both from South Africa.
BoZ governor Dr Caleb Fundanga said, on May 20 this year, FirstRand made an offer in terms of which FNB Zambia would purchase selected assets and liabilities of FBZL.
"Upon agreeing appropriate terms, BoZ accepted the offer by FirstRand Bank on June 30th June, 2011," said Dr Fundanga.
FNB Zambia managing director Sarel Van Zyl said it would take about nine month before the takeover of FNBZL was completed.
He said the transaction would not result in job losses for FNBZL.
Labels: FINANCE BANK, FIRST RAND GROUP, LAMECK ZIMBA, MMD, NEOLIBERALISM
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Govt sells Finance Bank
By Chiwoyu Sinyangwe
Tue 13 Sep. 2011, 14:00 CAT
FINANCE Bank Zam-bia has been sold for K27 billion to First National Bank Zam-bia, a bank whose parent, FirstRand Limited provided top officers to run the bank after it was forcibly taken over by the Bank of Zambia last December.
Under the terms of the transaction,
FNB Zambia was to take over about 96 per cent of the total assets of FBZL and the
remaining - "toxic" assets of five loans worth K300 billion would remain with FBZ (under possession) to be administered by BoZ. With this acquisition, FNBZ would leap to become the fifth largest bank in the country from its current position where it is among the smallest.
Finance Bank was seized by the BoZ last year for allegedly breaching financial laws and was then managed by FirstRand. It has about 1,000 employees and 39 branches. FNB already operates in Zambia and has a presence in six other African countries excluding South Africa and Zambia.
BoZ director for bank supervision Lameck Zimba said FNB didn't want to acquire those which had some encumbrances and also excluded certain assets and liabilities which were still in court.
"The new buyer didn't want to acquire those which had some encumbrances, and also when we did an inspection, there was a lot of non-performing loans because there was a lot of insider lending and some of those assets are uncollectable," Zimba said during a media briefing yesterday.
"Taking that into account, the net asset value of Finance Bank at the time the due diligence was done, the net asset value was about K22 billion and then when you take into account those excluded related part advances, excluded first assets, also deferred taxes, you come to the fair value adjustment to treasury Bills and Government Bonds and then you come to the net asset value of K3 billion, and taking into account the intangible assests - goodwill valued...you find that the purchase price comes to K27 billion."
The value should not be looked at in isolation on its own. It has to factor in the fact that the whole set of liabilities which the institution is taking over. They are taking over a lot of liabilities. So you have to look at the net position of the institution after that you look at the asset and their quality, and the burden the institution taking over is taking And BoZ deputy governor for operations Dr Austin Mwape claimed that officers from FirstRand Bank did not influence the decision to award FBZL to FNBZ.
He said the deal was not "plain-sailing" for FirstRand as BoZ's financial advisors - London's Deloitte had helped to give advice on the competing interests which had been expressed which came from other competing banks.
"On the face value, one might have views that probably there was something wrong. The people who were managing Finance Bank Zambia Limited were engaged in their personal capacities and they were employed and reporting to the Central Bank," Dr Mwape claimed.
"To facilitate independence in determining the value, we engaged Deloitte LLP of London, a reputable accounting firm which we retained as our financial advisors in the consummation of the whole transaction. Even the offer that was given by FNB Zambia was subject to assessment by an independent accounting body which had a lot of experience in this matter, and it was only after they had given us the comfort that the value which was offered did meet the normal standards which any other bidder would have put through did we agree."
BoZ secretary said applications for injunctions by FBZL shareholders in the three cases before the courts of law had been dismissed, allowing BoZ to perform its statutory mandate.
Other institutions that expressed interest in acquiring Finance Bank included First Alliance Bank, Eximbank of Tanzania, I&M bank Limited from Kenya, JM Capital and Quantile Capital - both from South Africa.
BoZ governor Dr Caleb Fundanga said, on May 20 this year, FirstRand made an offer in terms of which FNB Zambia would purchase selected assets and liabilities of FBZL.
"Upon agreeing appropriate terms, BoZ accepted the offer by FirstRand Bank on June 30th June, 2011," said Dr Fundanga.
FNB Zambia managing director Sarel Van Zyl said it would take about nine month before the takeover of FNBZL was completed.
He said the transaction would not result in job losses for FNBZL.
Labels: BANKING, CALEB FUNDANGA, FINANCE BANK, FIRST RAND GROUP
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COMMENT - They need to bring back The Post, immediately.
Ex-Finance bank bosses face arrests as Bank pursues Post newspaper for K36b debt
Monday, December 13, 2010, 8:34
Shareholders of Finance bank and former senior directors are likely to be arrested for raft of criminal offences, it has emerged. And the new Finance Bank team is set to recover a K36 billion overdraft by the Post newspaper.
Last week on Friday, The Bank of Zambia (BoZ ) took possession of operations of Finance Bank, saying the action was aimed at protecting the interests of depositors and other stakeholders.
BoZ has since appointed First Rand of South Africa to oversee the operations of the bank and specialists led by Leornard Hane as acting CEO on Saturday took over management of the Bank. There was jubilation from workers as the new team introduced itself at the head office.
The Watchdog has been informed that the immediate task of the new team is to recall outstanding loans, overdrafts and obligations to avoid impairments.
Insiders have disclosed that the Post Newspapers limited is one of the major debtors with an overdraft of K36 billion. The new team is said to be planning to move to recover this money immediately.
A report by Boz on Finance Bank inspection department exposed scandalous acts of fraud, theft and unsound banking practices by shareholders, directors and senior management.
Criminal charges are therefore to follow shareholders, former directors and senior management of the bank.
The charges will include theft, fraud and unsound banking practices and for breach of the the banking Act of Zambia.
Labels: CORRUPTION, FINANCE BANK, FIRST RAND GROUP, NATIONALISATION, RAJAN MAHTANI, THE POST
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