FBC Holdings dumps bank-building society merger

Published: 26 June 2014

FBC Holdings has adjusted its plans to meet the Reserve Bank of Zimbabwe's $100 million capitalisation requirements and will no longer merge FBC Bank and FBC Building Society.

Chief executive John Mushayavanhu told the company's AGM this afternoon that the group has since submitted its re-capitalisation plan to the central bank to meet the $100 million capital requirement for commercial banks.

The group has also submitted a separate re-capitalisation plan for FBC Building Society, with building societies supposed to meet a capital requirement of $80 million.

"We have submitted our re-capitalisation plan to the RBZ …..basically the bank is going to trade its way into complying with the $100 million capital requirement, and the building society will also trade its way into compliance with the $80 million capital requirement by 2020.

"If we can grow our profit after tax by 5 percent each year between now and 2020, the numbers given by auditors show that we can meet the capital requirements," said Mushayavanhu.

Mushayavanhu said if this projected growth is not achieved, they could still utilise dividends from the group's other subsidiaries to re-capitalise the bank and the building society.

As a last resort, the group could possibly sell under-performing subsidiary, Turnall Holdings, added Mushayavanhu.

"And by the way I don't even need to talk about selling Turnall, but if the need arises to sell Turnall to meet those numbers."

Meanwhile, giving a trading update on the performance of the group in the year to end of last month, Mushayavanhu highlighted that FBC Bank's profitability of the unit is ahead of the budget and that achieved in the same period last year.

The bank's loan book has gone down by 10 percent compared to the audited position as at 31 December 2013

Deposits and lines of credit have increased by 6%.

"As we speak we have a $60 million three-year facility from Afreximbank that has been approved and we are awaiting final sign off by the 30th of June which will bring in an additional US$20 million as the $40 million has already been drawn down," he said.

The building society's performance is currently in line with their set budget and ahead of that experienced in prior year with a contribution of 46 percent to the Groups overall profit before tax.

Turnall's performance so far has been below budget, although management expects a turnaround in fortunes by year-end.

The AGM also saw the company's shareholders approving all the proposed resolutions.
- bh24

Tags: FBC,