FMB meets Mangudya over Barclays takeover

By Paul Nyakazeya

First Merchant Bank (FMB) chief executive officer, Dheeraj Dikshit, yesterday met central bank governor, John Mangudya, over compliance issues following Barclays Plc’s disposal of its shareholding in its Zimbabwe unit to the Malawi-listed financial institution.

Dikshit confirmed meeting Mangudya and other Reserve Bank of Zimbabwe (RBZ) officials, but refused to disclose details. A binding agreement was signed between Barclays Plc and FMB in London on May 30, the same day an application for regulatory approval was made to the RBZ.

In terms of the transaction, FMB will acquire 41,2 percent of the group, with Barclays Plc maintaining a residual investment of 11,8 percent for three years. Employees will have 15 percent shareholding in the bank, held through their share ownership trust. The other 33 percent shares in the bank would remain free-floating on the Zimbabwe Stock Exchange.

FMB will have the right to buy the remaining stake held by Barclays Plc. During the three year period, the bank would be branded Barclays & FMB.

The process to obtain regulatory approvals is expected to take about 90 days.

The deal had courted criticism from indigenisation activists, who argue it was against the spirit of government’s drive to transfer ownership of foreign-owned entities into indigenous Zimbabweans.

Mangudya, however, told a Parliamentary portfolio committee two weeks ago that the deal complied with the country’s indigenisation policy. Zimbabwe’s indigenisation policy requires majority ownership of major businesses, while limiting foreign participation to 49 percent.

Mangudya said Barclays was in effect, selling 43 percent of its shares in the Zimbabwe unit to FMB, which is below the 49 percent threshold for foreign investors. He said 32 percent would remain listed on the Zimbabwe Stock Exchange, 15 percent would be offered to employees and management while 10 percent would be retained by Barclays Plc for the next three years to ensure continuity.

Dikshit arrived in the country on Tuesday night as FMB was announcing an agreement with Opportunity International to acquire their ownership of the global microfinance network’s operations in Malawi, Opportunity International Bank Malawi (OIBM).

The transaction is the second major corporate action announced by FMB this year following its acquisition of Barclays Zimbabwe. Commenting on the deal, Dikshit said the fact that Opportunity International had entrusted FMB with their operations in Malawi said a great deal about their regard for their ethics, governance and sustainability.

“After Barclays Zimbabwe conducted a thorough due diligence on FMB to ensure that we could be trusted to look after the interests of its customers, staff and communities, this is another very solid, independent tribute to the underlying principles and practices of the bank that has bought into Barclays Zimbabwe,” he said.

FMB chairman, Hitesh Anadkat, described the agreement as “an historic development for all of us at FMB, for Opportunity International and, most importantly for the 400 000+ Malawians who have come to depend on OIBM for small-scale transactional savings and loan services”. Financial Gazette