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TN, Tedco Deal: the Rise of a new Banking Kingdom?

COME New Year, TN Bank founder Tawanda Nyambirai will either be a happy man or a sad one.

An extraordinary general meeting (EGM) slated for December 28 will draw the line between a good year and a bad one for the corporate lawyer-cum-businessman.
Not that there will be a lot of opposition to the deal because analysts reckon it will be another day for some rubber stamping.
At the EGM, Tedco shareholders will vote for or against the deal. The deal, the only one in the year on the ZSE, will see TN reverse-list Tedco, a once vibrant furniture and clothing retail group.
Apart from retail interests, Tedco also owns a furniture manufacturing company, Luxaire, among other businesses in the sector.
Analysts say TN’s plan is simple — acquire Tedco and get a listing on the ZSE. But that is not all. TN stands to benefit from Tedco’s already established branch network. This, analysts say will see the new kid on the banking block roll out service faster.
A reverse-listing will help TN Financial Holdings cut through the red tape normally associated with a new listing, getting that advisory firm to do this and auditors to do that and eventually floating shares through an initial public offer plus a regulators stamp.
Should the deal go through, it will see the emergence of yet another financial services group on the market.
From there, TN’s challenge will be to attract institutional and small depositors to do business with the bank.
Already, the bank’s marketing and promotional machine is in full swing to promote the brand. Billboards have been erected on major roads.
TN came to the market at a time other banks are living off crumbs.
Unlike in the post-2004 banking crisis that saw indigenous banks faltering owing to liquidity constraints and a depositors flight to traditional banks, Standard Chartered, Barclays and Stanbic, 2009 has proven the same particularly on the former.
Latest figures show that deposits were at US$1,016 billion in October with the traditional big banks, Barclays, CBZ, Stanbic and Standard banks, accounting for 61%. This leaves the other 14 financial institutions scrambling for for the remaining US$390 million.
This situation is worsened by the fact that close to 90% of the funds are transitory, lasting less than 30 days within the coffers of the financial institutions. Of the local banks, CBZ is fighting it out with traditional banks. CBZ is leading in terms of loans, deposits and other banking activities.
“We need to look at what is happening in other countries and at the same time ask the question why the big banks are getting that business,” an analysts said last week. “If you look at Trust Bank (one of the banks which faced difficulties and was incorporated into ZABG), you would realise that they were very flexible and very innovative, coming up with different products which made them the dominant banks. This means that indigenous banks still have a future if they are innovative though the playing field is tilted against them.”
Analysts believe that indigenous banks still have a fighting chance like in the past. Local banks won the market in the 1990s because traditional banks were not flexible.
But TN’s plan is not an entirely new one at all. The Century Bank (CFX) and OK Zimbabwe partnership was moulded along the same plan, ride on the back of branch network.
Even Kingdom has been there too. Kingdom through Meikles, Barbours, TM Supermarkets and Greatermans also benefited from such an arrangement.
Econet, one of Kingdom Bank’s traditional clients, is not doing business with the bank on the same scale amid speculation that clients are now spread to other banks. But analysts say this could be Econet moving cash to much stronger banks than anything else.
Econet Wireless sold its 10% stake in Kingdom Meikles Limited (KML), a 2007 merger of Kingdom Financial Holdings Ltd (KFHL) and Meikles Africa Ltd, following a shareholder wrangle between Nigel Chanakira and John Moxon.
The market read Econet’s move to divest out of KML as washing their hands off the politics that was playing out at the time that saw Moxon and a number of his companies being specified.
Kingdom’s other clients such as the Meikles controlled businesses –– TM Supermarkets, Meikles Hotel and Meikles Department Stores, Greatermans –– understandably have also stopped banking with Kingdom.
Although there is no direct relation to Econet’s decision to offload its shares in KML, there could be a remote connection.
The consortium that bought Econet’s KML stake, Philip Chiyangwa, Themba Mliswa, Chipo Mtasa and Langton Nyatsambo, will have a minimal presence on the new TNFH board. Rugare Chidembo was once Pinnacle Holdings MD. He is believed to be representing Chiyangwa’s interests on the KML board.
So could the reverse takeover of Tedco be a grand Strive Masiyiwa and Nyambirai financial services project that will see the rise of a new financial services kingdom that does not fight dirty and has the right image? Time will tell.

 

Chris Muronzi

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