FBC not selling Turnall

Published: 05 December 2013

LISTED financial services group, FBC Holdings (FBCH), has shelved plans to sell its 49 percent stake in the roofing and building products manufacturer, Turnall Holdings Limited, the Financial Gazette reported.

The group's spokesperson, Priscilla Sadomba, told the Fingaz last week that FBCH had sought to dispose of its stake in Turnall to meet new capital thresholds announced by the Reserve Bank of Zimbabwe (RBZ).

However, Sadomba said the decision to put the plans on hold was made after the recent announcement by the RBZ that compliance with the new capital levels could possibly be extended to 2020.

"Our original plans to dispose of Turnall were part of our plan to meet new minimum capital requirements as previously announced by the RBZ governor,” said Sadomba.

"We have put those plans on hold for now as there has since been an informal announcement by the RBZ, that compliance with the new capital requirements could possibly be extended to 2020.”

Financial institutions have been struggling to meet the minimum capital levels after the central bank hiked the thresholds by up to 700 percent.

Commercial banks‘ minimum capital requirements were increased to $100 million from $12,5 million while building societies' minimum capital requirements were increased to $80 million from $7,5 million.

Banks were expected to meet the minimum capital requirements by June 2014.

But the former central bank governor, Gideon Gono told a Confederation of Zimbabwe Industries (CZI) conference that the RBZ could extend the deadline to 2020.

Though the decision has not been officially communicated to banks, this came as welcome relief for an industry that had argued that the minimum capital requirements would discourage fresh investment and militate against ongoing efforts to mobilise lines of credit.

FBCH had also intended to meet new capital requirements for the bank by merging it with FBC Building Society. This plan has also postponed.

Last year Turnall was the target of an acquisition bid by a consortium comprising of a Swiss private equity firm and a venture capital fund.

There were also unconfirmed reports that an unnamed Russian resources firm was interested in the Turnall deal.

Turnall is majority owned by FBC Holdings after its banking unit, FBC Bank, converted a $8 million debt owed by Shabanie Mashava Mines (SMM) to the Africa Export and Import Bank into equity.

FBC Holdings reported a solid performance in the first half of the year to June 30, 2013, driven by increased revenue from the financial services operations as well as containment.

Total income was marginally up at $36,7 million largely weighed down by mandatory reduction in interest margins and charges ordered by RBZ.

However, despite the effect of the RBZ's directive, income increased by two percent to $11,5 million.

Profit after tax during the six months reached $8,3, representing a 20 percent increase from $6,9 million for the corresponding period last year.

Basic earnings per share rose from 1,06 US cents to 1,31 US cents from the same period last year while its cost to income ratio improved to 73 percent from 75 percent.

The improvement in the cost to income ratio was due in part to the group's ability to maintain operating expenses in line with inflation, while also decreasing staff costs through a rise in automation and electronic transactions.
- fingaz