Business / Companies
FBC to surrender building society licence
06 Jun 2013 at 23:02hrs | Views
Listed financial services group FBC Holdings, faced with the possibility of failing to meet new minimum capital requirements by 30 June, plans to surrender its FBC Building Society licence to regulatory authorities after merging its operations with FBC Bank. In a statement to shareholders yesterday, the group's chairman, Mr Herbert Nkala, said the group was undertaking a restructuring exercise under which the 40 percent currently held by the National Social Security Authority in the building society would be transferred to the group via a share swap, giving FBC Holdings a 100 percent ownership.
After the transaction, NSSA, already the largest shareholder in FBC Holdings, will see its shareholding increased from 26,53 percent to 35,13 percent while that of other shareholders would be diluted.
Mr Nkala said directors had decided on the transaction because the group could not raise the minimum capital requirement for both the bank and the building society.
Commercial banks are supposed to have a minimum capital of $50 million by 30 June while building societies should have $40 million by the same date.
Mr Nkala said shareholders were being asked to vote on the proposal which will be discussed at an extra-ordinary general meeting on 27 June.
The proposal requires at least 51 percent support from shareholders while regulatory approval would also be required from the Zimbabwe Stock Exchange, the Securities Commission of Zimbabwe, the RBZ, the Minister of Finance and the Competition and Tariff Commission.
Mr Nkala said if the operations of the two institutions were not merged, the group would not be able to raise the capital required for the new thresholds.
"Despite having met the set threshold for 31 December 2012, the new minimum capital requirements announced by the Reserve Bank will impose an onerous obligation on FBCH if the licences of its two banking institutions are not rationalised in the short term as well as in the long term as regards increases in capital requirements," he said.
Mr Nkala said if the transaction is rejected by shareholders, it would result in both the bank and building society failing to meet the prescribed threshold and failure to attract external lines of credit and institutional depositors as well as loss of confidence in the FBC brand.
Mr Nkala said the merger of operations and surrender of the building society licence would not have an impact on the group's business as the commercial bank would continue to underwrite mortgages.
"This transaction will not result in any changes to the current or future terms of FBC's mortgage finance," he said.
A number of financial institutions are exploring various ways to raise capital to meet the new threshold set in the 2012 Mid Term Monetary Policy Statement.
So far, only one commercial bank, TN Bank, has publicly announced that it has surpassed the capital requirements after the majority shareholder, Econet Wireless Zimbabwe, pumped in $50 million to bring its capitalisation to $75 million.
AfrAsia Kingdom Limited also announced that it had embarked on a capital raising drive to meet the new capital requirement.
The group said it would explore various initiatives, including a rights offer to existing shareholders and offering shares to new investors.
After the transaction, NSSA, already the largest shareholder in FBC Holdings, will see its shareholding increased from 26,53 percent to 35,13 percent while that of other shareholders would be diluted.
Mr Nkala said directors had decided on the transaction because the group could not raise the minimum capital requirement for both the bank and the building society.
Commercial banks are supposed to have a minimum capital of $50 million by 30 June while building societies should have $40 million by the same date.
Mr Nkala said shareholders were being asked to vote on the proposal which will be discussed at an extra-ordinary general meeting on 27 June.
The proposal requires at least 51 percent support from shareholders while regulatory approval would also be required from the Zimbabwe Stock Exchange, the Securities Commission of Zimbabwe, the RBZ, the Minister of Finance and the Competition and Tariff Commission.
Mr Nkala said if the operations of the two institutions were not merged, the group would not be able to raise the capital required for the new thresholds.
"Despite having met the set threshold for 31 December 2012, the new minimum capital requirements announced by the Reserve Bank will impose an onerous obligation on FBCH if the licences of its two banking institutions are not rationalised in the short term as well as in the long term as regards increases in capital requirements," he said.
Mr Nkala said if the transaction is rejected by shareholders, it would result in both the bank and building society failing to meet the prescribed threshold and failure to attract external lines of credit and institutional depositors as well as loss of confidence in the FBC brand.
Mr Nkala said the merger of operations and surrender of the building society licence would not have an impact on the group's business as the commercial bank would continue to underwrite mortgages.
"This transaction will not result in any changes to the current or future terms of FBC's mortgage finance," he said.
A number of financial institutions are exploring various ways to raise capital to meet the new threshold set in the 2012 Mid Term Monetary Policy Statement.
So far, only one commercial bank, TN Bank, has publicly announced that it has surpassed the capital requirements after the majority shareholder, Econet Wireless Zimbabwe, pumped in $50 million to bring its capitalisation to $75 million.
AfrAsia Kingdom Limited also announced that it had embarked on a capital raising drive to meet the new capital requirement.
The group said it would explore various initiatives, including a rights offer to existing shareholders and offering shares to new investors.
Source - chronicle
