The investment will resuscitate the troubled bank that slipped into curatorship last year after an investigation by the Reserve Bank of Zimbabwe (RBZ) showed that founding directors — Timba and Kundishora — had allegedly spirited away depositors’ funds.
As part of the transaction, NSSA were given 446 692 333 unissued shares in the bank worth US$24 million. NSSA will inject US$9,8 million into the bank for it to be compliant with the Reserve Bank of Zimbabwe (RBZ) minimum capital threshold of US$10 million for merchant banks.
Standardbusiness could not establish when depositors, who have money locked in the bank for more than six months, would access their cash.
RMB curator Reggie Saruchera said his “team believes we can effectively respond after the expiry of the term of office”.
His extended term of office ends next month and by that time, the deal would have been sealed. The term had ended in December, but was extended by a further three months to allow the finalisation of NSSA’s entry into the bank.
NSSA will convert into equity US$8,5 million owed by RMB. NSSA will also assume a US$5,7 million owed to Econet by RFHL and RMB. This debt has to be paid in eight months.
Shares held by RFHL, ReNaissance Investment Banking Corporation, ReNaissance Securities Nominees in Afre will be transferred to RMB to offset a US$13,3 million debt owed by RFHL.
In addition to that, Econet has also agreed to sell its 19,7% shareholding in Afre, giving the pay as you earn pension fund a foothold on Afre, which has interests in insurance and property. This means that NSSA will have over 40% in Afre and influence the appointment of representatives on the board. The shareholding will increase if the cash-rich NSSA underwrites Afre’s capital raising initiative.
Currently, Econet has five representatives — Tawanda Nyambirai, George Nyashanu, Tracy Mpofu, Krison Chirairo and John Gould — on the Afre board. The directors will resign once the deal is concluded.
The quintet moved in after the contagion effect at RMB spread to Afre by virtue of having similar shareholders. Timba was Afre executive chairman and also group CEO of RFHL.
The property arm of Afre, Pearl, has been attractive to NSSA, as it has properties in all the cities and NSSA wants to diversify its portfolio into properties.
Asked whether NSSA would support the US$15 million recapitalisation of Afre, which has been on the cards for over a year, NSSA general manager, James Matiza, said the new board would determine how the company will be recapitalised. “It (the board) will decide whether the company needs money and does it proceed with a capital-raising, either through a rights issue or borrowings,” Matiza said.
The placement of RMB under curatorship came as the central bank said it had no appetite for curatorships.
An RBZ investigation into RMB unearthed that corporate governance was alien and that it was engaging in non permissible activities.
It also established that the bank was technically insolvent with negative capital of US$16 million. RBZ then read the riot act banishing Timba, Kundishora and some board members from holding any position in the banking sector.
NSSA to appoint members on RMB board: Matiza
Matiza told Standardbusiness, the pension fund will appoint board members on the RMB board subject to approval from the central bank.
RBZ vets all board members appointed on banks.
Matiza said NSSA will also influence the appointment of board members on the Afre board by virtue of having over 40% shareholding. He said discussions are still to be held on whether or not Econet would retain its mobile insurance product, Ecolife with Afre.