ZABG’s great escape

the dreaded chop came ahead of today’s deadline for undercapitalised banks to stop all banking services.
Speaking on condition of anonymity, a high-profile executive in the bank told Herald Business the deal was done and was only waiting for  regulatory approvals.
The source said the two investors would be the major shareholders and would inject US$27,8 million for ZABG to meet the RBZ’s minimum capital threshold.
ZABG requires US$15,3 million to plug its negative capital base and another US$12,5 million to meet the RBZ’s minimum regulatory capital threshold.
Thereafter, the source said, expectations are that the new shareholders would raise US$20 million to strengthen the bank’s operations.
The Mines and Mining Development Minister Obert Mpofu-linked Trebor & Khays will be the majority shareholder, followed by Unicapital. Swiss AFG Global was dropped to comply with the country’s indigenisation laws.
Representatives of the Mauritian investors were expected in the country last Friday to formalise the deal and tie up a few loose ends.
“ZABG has finalised negotiations with Unicapital of Mauritius and local private company Trebor & Khays,” said the source. “These are the two anchor shareholders. We will have other institutional investors, but with these two we will be able to meet the (minimum) regulatory capital levels.”
ZABG is 92,8 percent Government-owned.
Former depositors of the Royal Bank, Barbican and Trust, which were amalgamated to form the Zimbabwe Allied Banking Group (ZABG) in 2004 after succumbing to the 2003-2003 financial sector crisis, hold 7,2 percent stake in the bank.
ZABG was unbundled in 2010 after shareholders of the amalgamated three banks successfully contested their amalgamation to form the supposedly giant bank.
“Over and above the (US$27,8 million) fresh capital injection, we expect lines of credit to be flowing in. The foreign investor has access to lines of credit,” said the source.
He said the bank was set for a major transformation, considering its only challenge had been capital, but had been doing relatively well in terms of trading.
Currently, ZABG has 22 branches across the country and about 50 000 clients as at the end of last year. Fresh capital would put it in good stead for growth.
It was not clear by Friday whether the other undercapitalised bank, Genesis, had made the breakthrough to survive the dreaded chop by today’s RBZ dead-          line.
Royal Bank announced on Tuesday that its Kenyan partner, Commercial Bank of Africa, would inject the requisite funds to meet regulatory capital requirements.