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AfrAsia’s grand plans for Kingdom

MAURITIAN banking group AfrAsia Bank Limited (ABL) said Kingdom Bank will be in the top five institutions in the short-term buoyed by the entry of new investors.


James Benoit, ABL chief executive officer, told Standardbusiness that the entry of new investors “will help us to recapitalise AKZL [AfrAsia Kingdom Zimbabwe Limited] and will provide us with strategic and market insights”.

“We intend to make the bank a top three to five bank very quickly with strong capabilities in domestic and regional corporate banking, trade finance and private banking in addition to the substantial strengths already in place at Kingdom,” Benoit said.

ABL is set to call the shots in Kingdom’s parent company AKZL following the exit of founder Nigel Chanakira.

An investment vehicle linked to Chanakira agreed to sell its 30% stake in AKZL to the company for US$12,5 million, made up of US$2,5 million in cash and the balance in non-performing loans.

The transaction was recently approved by AKZL shareholders together with the first phase of the US$100 million recapitalisation of Kingdom.

Phase one involves raising capital (US$5 million) from existing shareholders and US$15 million through a private placement.
Subsequent phases of recapitalisation will raise US$80 million.
The proposed recapitalisation comes at a time local banks are reeling from a liquidity crunch.

Benoit said the liquidity crunch has been affecting the banking sector in general for some time now and was exacerbated with the end of year demands of the financial services peak period.

“For us, the present capital raising will be the decisive factor to resolve this issue in the long run,” he said.

Recently ABL gave Kingdom a US$10 million as liquidity support to help Kingdom ride out of the cash storm.

AKZL and its subsidiaries — Kingdom Bank and Kingdom Asset Management — will rebrand to AfrAsia Zimbabwe Holdings, AfrAsia Bank Zimbabwe Limited and AfrAsia Capital Management respectively.

The rebranding caused consternation among minority shareholders at a recent meeting, who felt that the AfrAsia brand was not known in the market.

Benoit said AfrAsia “has become a powerful brand in our niche products and markets”.

“We have recently won several banking awards in recognition of that [powerful brand] in Africa and in Mauritius. We have a powerful brand communications and marketing programme which will be implemented along with recommendations of our clients,” he said.

Kingdom has been hit by a surge in non-performing loans.

Last month minority shareholders lambasted the bank’s management for dishing out loans without taking security.

The shareholders requested an undertaking that it won’t happen again.
In its 2013 annual report, ABL said its results were more subdued, being affected by negative returns from its investment made in Zimbabwe, which was weighed down by non-performing loans.

“A restructuring at shareholder, board and management levels has been initiated together with a capital-raising exercise which is expected to turnaround the business,” ABL said.

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