The country’s arguably largest financial institution, CBZ Holdings, has issued another cautionary statement in which it says it is in discussion to takeover a complimentary business.
Group chief governance officer, Rumbidzayi Jakanani, in a statement said; “Further to the Cautionary Announcements issued on 18 June 2022, 21 July 2022, 29 August 2022, 27 September 2022, 14 November 2022, 19 January 2023, 2 March 2023, 6 April 2023, 5 June 2023 and 27 July 2023, the directors of CBZ Holdings Limited (“the Company”), wish to advise all shareholders and the investing public that the company is still engaged in negotiations for a potential acquisition of a complimentary business.
“The acquisition, if successfully concluded, may have a material impact on the value of the company’s shares, the full impact of which is currently being determined. Accordingly, shareholders are advised to exercise caution when dealing in the company’s shares until a full announcement is made.”
The transaction is believed to be the acquisition of ZB Financial Holdings in its quest to build a bigger bank, but ZBFH is in a wrangle with a shareholder of its subsidiary.
This comes as ZB Holdings is trying to merge its Bank with the ZB Building Society in order to meet the minimum regulatory capital as prescribed by the Reserve Bank of Zimbabwe for the subsidiary.
It is a regulatory requirement for a banking license. Banking institutions are required to have a minimum capital of US$ 30 million and building societies or mortgage lenders are required to have minimum capital of US$ 20 million.
ZB proposed to merge its banking division with its mortgage lending unit to meet the minimum capital requirement. That effort, however, hit a snag because of an ongoing shareholder wrangle between an investment vehicle belonging to veteran banker Nicholas Vingirai called Transnational Holdings Limited, which has a direct holding in Intermarket Holdings Limited which subsequently controls the building society or mortgage lender and ZB Financial Holdings.
Vingirai, through Transnational Holdings Limited, insists that the merger between the bank and the building society/mortgage lender can only take place once the Government of Zimbabwe brokered resolution between Transnational and ZB Financial Holdings over what he called the scandalous and fraudulent acquisition of Intermarket by ZB Financial Holdings is fully implemented.
The dispute between the two parties is longstanding and began as far back as 2006. That was about 16 years ago and there really is little prospect of that dispute and subsequent resolution brokered by the government being implemented in time to meet the RBZ deadline.
In 2004 after the banking crisis that claimed the scalps of most of the indigenous banks in Zimbabwe, Vingirai had to leave the country and spent seven years in self-imposed exile after he was charged with contravening the country’s exchange control laws.
He was absolved in 2011 of the charges of externalisation of foreign currency. However, the government had expropriated his firm Intermarket Holdings in 2006. Since that time Vingirai has been on a crusade to recover his assets which are now in the centre of the dispute.
ZB Financial Holdings comprises assets that belong to Transnational Holdings Limited. For the assets that were annexed from Vingirai, the government duly transferred 22,7 percent of the shares in ZB Financial Holdings to the veteran banker.
More shares are due to Vingirai’s investment vehicle so that they correspond to the value of Intermarket Holdings at the time that the government took it over. In July 2021, 11 percent of ZB Financial Holdings shares were supposed to be transferred to Transnational Holdings Limited.
This is pending. The dispute has been long drawn out with all kinds of proposals being made, ranging from demerging Intermarket from ZB to allocating shares to the veteran banker.