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Premier retrenches

PREMIER Finance Group (PFG) has embarked on a restructuring exercise which has resulted in the retrenchment of 25% of its employees.

The retrenchment package included three months notice pay, cash in lieu of leave days, one month’s salary,  relocation allowance, a month and a half salary for every year worked, three months severance pay, 75% of value of motor vehicle, three months medical aid  and funeral cover, fuel allowance for one month and pension refund based on pension rules agreed.
A total of 42 of the 162 staff members have been retrenched.
The restructuring came after new investors, who now own 54% of the company, failed to agree with local investors on how the company should be structured.
Yona Banda is now the head of the asset management arm of the financial institution.
The restructuring has also seen the dismantling of the Premier Finance Group into two separate business units –– Premier Banking Corporation Ltd and Premier Asset Management.
A new board of directors has also been appointed to oversee the operations of the bank and Sengi Mlambo has been retained as interim chairperson.
The other board members are Dirk Harbecke, Sarida Khambata, Gloria Mawarire, Sonja Rossteuscher and Musa Adam Yousus. The new investors appointed Len Steffen (62), a Dutch national, as group CEO who according to sources has been clashing with managing director Douglas Mamvura on how the group should be structured and run.
Sources said the new investors want to abolish the position of managing director held by Mamvura, which they say is a duplication of the CEO’s role.
Insiders said Mamvura could leave the group “soon” because he was not comfortable working in an environment where orders are dictated from outside the country.
A board meeting is scheduled for next week to decide on how best the financial institution should be structured and how it should move forward.
The German-based investors led by a financial group, African Development Corporation (ADC), acquired a 54% stake in PFG in a deal worth US$6 million during the last quarter of 2009. Under the deal, ADC has a 45% shareholding and KMQ Enterprises, a Mauritius domiciled company, owns a nine percent stake. The disposed shareholding belonged to PFG founder members
Of the remaining shareholding, 28% is held by a local consortium made up of investment banker, George Manyere, banker and chartered accountant Walter Kambwanji and Mamvura. The other 18% stake is owned by local investors and an employee share trust.
In a written response to businessdigest questions on Wednesday, PFG said it was in the process of repositioning itself as a corporate and investment bank focusing on those key areas where management and the new shareholders feel it had a distinctive competitive advantage in a market with 26 financial institutions already operating.
“As a consequence of realising this focus, the group has to right-size operations and embarked on a responsible retrenchment exercise that was concluded in record time,” said PFG
“The negotiations were done in a very transparent, objective and fair manner hence the exercise was completed after only three meetings. The package was very well received by staff and all the affected staff members have since signed and the documents are now with the Ministry of Labour.”
When asked if the 54% held by the foreign investors did not violate the Indigenisation Act, PFG said: “While it is true that the foreign shareholding in Premier currently exceeds the maximum allowed, the group has been given the necessary approvals by the authorities on the understanding that the foreign shareholding will eventually be reduced to not more than 49% within the timeframe set by the law.” 
Problems at PFG are beginning to emerge at a time when the bank’s deposits had increased by 15,3% in 12 months, against a background of low incomes, low banking confidence, liquidity constraints and the absence of the central bank as a lender of last resort.
Documents obtained from the Reserve Bank show that the bank’s deposits have increased from US$7,1 million in April to US$24,1 million in February this year under Mamvura. PFG is projecting its deposits to reach US$30,6 million by the end of this month.
Comparatively the merchant bank is at position with a 1,7% market share.
The top five banks, which are all commercial banks, with a combined deposit book of 80,01% are CBZ, Stanbic, Standard Chartered, Barclays and FBC.
Premier Bank’s loan to deposit ratio is about 48,9% and its total assets are worth US$19,258 249.
During the period under review the institution actively pursued structured finance transactions, arguing that it was because core banking business was taking longer to achieve levels that could sustain a bank in a market where liquidity is low.
Before Mamvura joined  the group, PFG had had five chief executives in two years  and this analysts say was a glaring indicator that something was wrong at the bank.
The five were founder Exodus Makumbe, Raymond Chigogwana, Barrie Hounsell, George Manyere and Peter Wood.

 

Paul Nyakazeya

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