FDH Financial Holdings Limited, new majority shareholder in the previously wholly State-owned Malawi Savings Bank (MSB), says it will not rush to take over the operations of MSB as it awaits regulatory approvals from the Reserve Bank of Malawi (RBM).
In an interview last evening, FDH Financial Holdings Limited chief executive officer Thomson Mpinganjira said in the meantime, the two banks—FDH Bank and MSB—will be operating as separate businesses pending RBM direction as the Banking Act does not allow an entity to run or own more than one bank.
In a communication to FDH Group employees dated July 3 2015 and seen by The Nation, Mpinganjira also assured the staff of job security.
The memo indicated that the process of integrating the two banks might take 18 to 21 months.
Said Mpinganjira: “I would like to inform you all that we will initially run the two banks as separate businesses subject to regulatory approvals from the Reserve Bank of Malawi. This means FDH Group employees will continue to do what they have been doing normally.”
He said his group was setting up an integration team that will manage the integration of the two businesses.
Mpinganjira also told the employees that the acquisition of 75 percent shareholding in MSB was in line with the group’s growth strategy set out a few years ago.
“The acquisition will give our business a greater footprint in terms of points of presence as well as have access to the big customer’s base that MSB is currently serving,” reads the memo.
Government on July 2 2015 disposed of 75 percent of its shares in MSB which were acquired by FDH Financial Holdings Limited in a controversial deal that drew a backlash from members of Parliament (MPs) and civil society organisations (CSOs) who opposed the sale.
In several interviews that Mpinganjira granted after the acquisition of the 75 percent shares, he has been assuring Malawians that the takeover of the bank would not affect the service delivery of MSB, the bank believed to be serving the rural masses.
Despite several assurances from government and FDH officials, the manner that the bank was disposed of did not go down well with several stakeholders.
Public Affairs Committee (PAC), a quasi-religious organisation, accused the Peter Mutharika administration of bad governance over the controversial disposal of MSB against recommendations of the Budget and Finance Committee of Parliament.
MSB’s 75 percent shares were sold at K9.5 billion ($21.1 million), of which about K5 billion ($11.1 million) was recovering of the promissory notes that government issued in May this year.
Earlier this year, government, through the Public Private Partnership Commission (PPPC), invited bids from strategic investors to buy its stakes in MSB and Indebank Limited, in which Capital Hill had majority stake.
Through the transactions, government wanted to, among other things, ensure that MSB and Indebank met new Basel II regulatory requirements in terms of capitalisation.
National Bank of Malawi (NBM) was named the preferred bidder for Indebank while FDH Financial Holdings Limited—owners of FDH Bank—was the sole bidder of MSB.