ZB Merger Awaits RBZ Approval  

By Anyway Yotamu

HARARE – Listed financial services group ZB Financial Holdings (ZBFH) says its proposal to merge its two banking units is awaiting the Reserve Bank of Zimbabwe (RBZ) approval and is hopeful the process will be completed by June this year, an executive has said.

In 2013, ZBFHL shareholders approved the merger of ZB Bank and ZB Building Society.

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But, the process has taken more than expected after it was stalled at some stage due to the fierce battle for control of the financial services group between one of the major shareholders, Nicholas Vingirai’s Transnational Holdings Limited and the government through State-run pension fund, the National Social Security Authority (NSSA).

There was also a long running battle over the shareholding of ZBFHL.

ZBFHL group chief executive officer Ron Mutandagayi said this week the central bank was assessing the proposal.

“The merger will depend on the RBZ approval but we anticipate that by the first six months of the year we would have merged the bank and building society,” Mutandagayi said.

In anticipation of the approval, ZBFHL has already consolidated the staff and most operations of the two units, Mutandagayi said.

The consolidation strategy will ensure compliance with the minimum capital requirements for both the commercial bank and the building society.

ZB Bank is already compliant with the minimum capital threshold.

The minimum capital threshold set by the governor of the RBZ, John Mangudya, requires that commercial banks raise their capital base to US$30m, while building societies are required to raise US$20m or Zimbabwe dollar equivalent.

ZBFH believes the move is a strategic one that will see the two units being able to harness economies of scale that include managing the cost of doing business.

This would mean better returns to shareholders and improved service to customers.

Once consolidated, the bank is expected to be one of the biggest in the country.

In December, NSSA disposed of its 37.79% ZBFHL shareholding in a share swap which saw the authority getting CBZ shares worth ZW$640m.

As part of the transaction, NSSA also received US$11,646,889 after factoring transaction costs.

In its financial results for the half year ended June 30, 2020, ZBFHL posted a real total income growth of 138% to ZW$1.998bn from ZW$838.2m in the same period in 2019.

The group said the growth was attributed to gratuitous fair value credits and foreign exchange gains which, combined, contributed 79% of the total income.

The group posted a profit of ZW$1.130bn for the period compared to ZW$237.8m in the comparative period in 2019.

The group’s total assets grew to ZW$9.879bn as at June 30, 2020 from ZW$9.254bn as at December 31, 2019 with a substantial part of the increase arising from the revaluation of properties in portfolio and equity investments and foreign denominated cash and bank balances.

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