Published: 26 July 2018

SEVERAL investors have been lined up to snap a significant stake in Agribank, as government moves to recapitalise the financial institution.

The agro-focused bank - wholly owned by government - is struggling to effectively deliver on its mandate of providing agriculture funding due to undercapitalisation.

Although government has for the past few years indicated its intention to dispose some of its shareholding in Agribank, the process has been stalled by squabbles between the Finance and Agriculture ministries, which together hold equal stakes in the financial institution.

However, Sam Malaba, Agribank chief executive said progress has been made with regards to preparing the groundwork on bringing in a strategic partner for the bank to help it meet the 2020 $100 million recapitalisation deadline.

"… a significant number of potential investors have already expressed interest in becoming a strategic partner for the bank," he said.

"As is required, a technical committee on Agribank has been established by government, whose main purpose is to oversee and manage the bringing in of a strategic partner for Agribank and to ensure that all the necessary approvals are granted."

By end of December 2017, the bank's regulatory capital stood at $54,9 million, and was above the minimum regulatory capital of $25 million, but short of the targeted $100 million.

Malaba said it was imperative that the bank has adequate capital to underwrite more meaningful business in line with its mandate.

The agriculture-focused bank has already sent out an invitation for expression of interest for the provision of transactional advisory services.

The transactional advisors will report to the technical committee. Among the key deliverables will be a due diligence report on Agribank, indicating the capitalisation requirements and the ideal strategic partner for the financial institution.

The bank recorded a profit after tax of $7,9 million for the year 2017 compared to $4,8 million in 2016 representing a year on year growth of 65 percent on the back of significant growth in non-funded income.

Non-funded income, at $10 million, grew by 115 percent from $4,7 million in 2016.

- fingaz

You might also want to read this

• Agribank workers seek US$-indexed salaries
• Agribank declares US$5,5m dividend
• Agribank on schedule for $100m capitalisation
• Agribank avails $6m livestock facility
• Agribank targets $50m in foreign credit lines
• Agribank close to securing a strategic partner
• Agribank secures $30 million for agriculture
• Agribank disburses $80m to agric
• Agribank secures $30m line of credit
• Agribank's net income grows