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Harare Bureau
AFRASIA Bank has offered to sell a substantial shareholding to Meikles Limited and is also pursuing a merger with a local bank to avoid potential collapse of the institution.Although the specifics of the deals could not be established, a source said AfrAsia was “frantically pursuing the two options” or may be forced to surrender their licence.
The financial crisis at AfrAsia formerly Kingdom Bank has resulted in the institution limiting withdrawals to only $50 per day.
“They’re looking for someone who can come in with capital because the situation is worsening,” said one source who requested not to be identified due to sensitivity of the matter.
“If those two fail to materialise, it will probably go for curatorship.”
Interestingly, AfrAsia once merged with Meikles in an infamous corporate marriage that collapsed in October 2009.
KFHL merged with Meikles in 2008 to become Kingdom Meikles Africa Limited in a deal that raised prospects of a bigger entity to list abroad.
KMAL was made up of TM Supermarkets, Meikles Hotel, Meikles Stores, Tanganda Tea Company, Cotton Printers (now defunct) and KFHL subsidiaries.
In 2012, AfrAsia Holdings, a Mauritius financial services group, acquired 35 percent in AfrAsia Bank, then known as Kingdom Financial Holdings Limited, after investing $9,5 million.
Last year, AfrAsia Holdings raised its equity to 54 percent after acquiring an additional 30 percent stake previously held by Nigel Chanakira, founder of KFHL.
But the situation at the financial institution has continued to deteriorate and the bank is said to have substantial outstanding payments on the Real Time Gross Settlement platform.
In his maiden monetary policy statement, Reserve Bank of Zimbabwe governor Dr John Mangudya said AfrAsia was facing liquidity challenges, but was pursuing various options to ameliorate the liquidity situation.
He said AfrAsia was seeking liquidity support from the major shareholder and pursuing a private placement transaction to boost capital levels.
Dr Mangudya said the central bank was satisfied with the current efforts by the major shareholder to strengthen the bank’s financial condition, as evidenced by an injection of $10 million, which improved the bank’s capital to $19 million as at June 30, 2014.
Efforts to get an official comment from AfrAsia proved fruitless by the time of going to print yesterday.
Mark Wood, Meikles executive director, could also not be contacted for comment.
Some of the institutions facing liquidity and solvency challenges include Allied Bank and Tetrad.
The banks command low market share in terms of loans (8,8 percent), assets (7,2 percent) and deposits (6,7 percent) as at 30 June 2014.
Dr Mangudya said the central bank has been engaging these institutions to come up with credible turnaround plans.
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