FMB ups capital ahead of Basel II rollout
FMB, one of the country’s Malawi Stock Exchange (MSE)-listed commercial banks, has boosted its capital base with the injection of $10 million (K4 billion) of unsecured subordinated debt from non-resident institutional investors.
The bank’s managing director Dheeraj Dikshit told Nation Online on the sidelines of the 17th annual general meeting in Blantyre last week that they increased the capital “purely with the objective of Basel II implementation”.
“The subordinated debt is in essence to bolster the capital of the bank just to make it stronger. It is additional capital which we could use to support the local services of the bank,” he said.
In a statement last week signed by general manager (finance) Lucas Kondowe, the bank informed its shareholders of the increase of its Tier 2 Capital or supplementary capital, through a private placement with non-resident institutional investors.
“The increase in the capital base of the bank provides scope for significant further growth and diversification of the bank’s balance sheet.
“No conversion rights are attached to the loan notes which matures in 2019 and the issue of the loan notes will not in any way affect or dilute the rights attached to the existing issued ordinary shares of the bank,” he said.
To meet the Basel II recommendations, the country’s 12 banks are expected to boost their capital base so that their Tier One Capital Ratio—the ratio of a bank’s core equity capital to its total risks weighted assets (RWA)—is at 15 percent.
Basel II is the second of the Basel Accords which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
The Reserve Bank of Malawi (RBM), the implementing agency of Basel II, has adopted the standards for risk and capital management.
But Dikshit expressed confidence that the bank will meet all the requirements of Basel II by the end of the year, through investment in infrastructure, technology and training of staff.
During the AGM in Blantyre, the bank’s shareholders, among others, confirmed the appointment of Dikshit as the managing director and approved the final dividend of K116.8 million (about $292 000), an equivalent of five tambala per share.
The shareholders also approved the fixing of fees and sitting allowances for the chairperson and other non-executive directors.
This then means that the directors fees for the chairperson have gone up to K2 million (about $5 000) from K1.25 million (about $3 125) while those of other independent non-executive directors is now at K1.75 million (about $4 375) from K1 million (about $2 500).
The sitting allowances for the chairperson and other independent non-executive director have remained stable at K125 000 (about $312) and K100 000 (about $100) respectively.
