Mangudya accused of meddling in Barclays takeover

Reserve Bank Governor Dr John Mangudya’s name is being dragged in the raging Barclays Bank Zimbabwe takeover bid by Malawian suitors, First Merchant Bank of Malawi.

Officials at the central bank accuse Dr Mangudya of having pecuniary interests in the transactions involving the Malawians. Officials also told Nehanda Radio from Harare that the RBZ Governor has been influencing the bidding processes in favour of FMB Malawi.

The officials say eyebrows were raised after the Governor dispatched a team of his loyalists at the RBZ to conduct the due diligence process in Malawi. They say the process was conducted in a non transparency manner arguing key people were left out from the Malawi trip. They say the process was conducted in a non transparent manner.

“The people that went to Malawi to do the due diligence were suspiciously handpicked by the Governor,” said an RBZ official. “The team was carefully picked so it can present a good report about First Merchant Bank Malawi to suit the interests of the Governor.”

The Central Bank officials have also accused Dr Mangudya of single handedly endorsing the Malawian suitors without recognizing the country’s indigenisation  policy.

Despite outcries that the directors of FMB Malawi were involved in underhand banking practices in Uganda which are threatening to destabilise the banking sector in the eastern African country, Dr Mangudya told a weekly newspaper, the Independent in Harare that he saw nothing wrong in the Malawians taking over the majority stake at Barclays Zimbabwe.

“This raised eyebrows considering how he has been handling the whole issue,” said an RBZ official.

The impending takeover of Barclays has brought an atmosphere of uneasiness in Zimbabwe’s fragile banking sector after it emerged the directors of FMB Malawi, which wants to take over Barclays Bank Zimbabwe, are mired in allegations of irregular banking practices in Uganda and Malawi.

One of the directors Rasik Kantaria is at odds with authorities in Uganda over irregular banking practices which media reports in Kampala suggest could pose a systemic risk to that country’s banking sector. 

The First Merchant Bank has announced it is in exclusive discussions to buy Barclays Bank Zimbabwe.

FMB said in a statement on its website it is in exclusive talks to buy out the 68 percent of Barclays Bank of Zimbabwe which are owned by the British company.

The remaining 32 percent of Barclays Bank of Zimbabwe’s shares are traded on the Zimbabwe stock exchange.

But the integrity of FMB directors appear to be threatening to scuttle the Barclays Bank Zimbabwe takeover bid amid reports suggesting authorities in Zimbabwe are now nervous following events in Uganda.

Under Zimbabwe’s Banking Amendment Act, a director or manager of a failed bank, whether outside, is not allowed to take up a role in a local bank.

The FMB director, Mr Kantaria, is the chairman of Prime Bank and long serving director of Crane Bank, which has been placed in receivership over irregular lending practices in Uganda.

Mr Kantaria – a significant shareholder at Prime Bank – is the second largest shareholder in Crane Bank with a 47.32 percent stake.

Ugandan authorities placed Crane Bank in receivership on October 20, 2016 and immediately suspended the nine-member board of directors, as well as the bank’s executives, saying the bank had failed to meet the legal requirements of its operating licence.

The Bank of Uganda (BoU) said in a statement that Crane Bank was “significantly undercapitalised”, adding that the lender posed a systemic risk to the stability of Uganda’s financial system.

“The continuation of Crane Bank’s activities in its current form is detrimental to the interests of its depositors,” the BoU said.

Crane Bank’s total capital to total risk-weighted assets ratio was at 12 percent at the time of the takeover, short of the statutory 18 percent for significant banks, according to the Bank of Uganda.

Both Kantaria and his fellow director at FMB, Dheeraj Dikshit, have been in the news over allegations of underhand banking activities.

There was no immediate comment from the Reserve Bank of Zimbabwe governor, Dr John Mangudya.

Barclays previously said it was looking to sell the stake as part of a broader exit from Africa and instead focus on a transatlantic strategy in the United States and Britain.

Barclays Bank of Zimbabwe is one of two banks together with Barclays Bank Egypt that do not form part of the lender’s South Africa-based Barclays Africa Group, which is also up for sale. Nehanda Radio