Revelations that First Merchant Bank of Malawi (FMB) bid is to acquire a majority stake in Barclays Bank of Zimbabwe (BBZ) has raised concerns in Zimbabwe.
The Herald newspaper in Zimbabwe reported that FMB is working with United Kingdom development finance group CDC in its bid to acquire a majority stake in Barclays Bank of Zimbabwe (BBZ).
The paper said with the support from CDC , FMB bid is to acquire a 57,68 stake in BBZ held by its parent Barclays Plc because CDC as the bank has no financial capacity to take over a much superior asset.
CDC Group Plc is a development finance institution incorporated in England and Wales. It has supported the building of businesses throughout Africa and South Asia and in Zimbabwe, CDC once had a presence among other companies in Cairns Holdings.
The bid have raised concerns because BBZ have higher capitalisation than FMB and there is a huge asset gap between the two banks.
The paper said, At the close of the 2016 financial year, BBZ had a market capitalisation of $65,19 million against the FMB group’s of $33,76 million. In terms of deposits, BBZ was at $391,7 million against FMB’s $144,48 million. There is also a huge gap on total assets with Barclays Zimbabwe at$476,2 million against FMB’s $208,75 million.
Reports show that FMB was in discussions with World Bank’s International Finance Corporation over the bid but they latter pulled out of the deal after raising integrity and ethical issues over the bank’s tainted past.
Concerns have been raised over the calibre of directors of FMB amid revelations they were implicated in alleged corporate misgovernances and malpractices in lending. The bank has also been implicated in racism allegations.
Two of the directors Dheeraj Dikshit (the managing director) and Rasik Kantaria have been in the news over allegations of lending malpractices and failure to comply with Malawian laws over money laundering and externalisation.
Information from various regional publications, shows that the main shareholders of the banking group are alleged to have been involved in externalisation and money laundering.
In Zimbabwe, under the Banking Amendment Act, a director or manager of a failed bank whether in the country or outside, is not allowed to take up a role in any local bank.