The Competition and Fair Trading Commission (CFTC) has put aside National Bank of Malawi (NBM) and Indebank merger application forms because they have not yet fulfilled some requirements.
However, NBM has said there are still some issues that CFTC has to clarify before the bank can satisfy all the requirements.
The stalemate comes eight months after NBM picked up a majority interest in Indebank, in which government had a controlling stake, at K6.7 billion ($14.9 million).
The process to merge the banks as per Financial Services Act requirement should have been approved by now, but information The Nation has sourced indicates that CFTC was asking NBM and Indebank to pay about K126.8 million as assessment fees.
The commission also advised the FDH and MSB merger to pay K54.3 million (about $72 000) as assessment fees.
According to Section 6.1.6 of CFTC Merger Assessment Guidelines, “an application for merger authorisation has to be accompanied by latest audited financial accounts and a payment of notification fees. The notification fee is 0.05 percent of combined turnover or total assets, whichever is the higher, of the enterprises proposing to effect the merger or takeover. The commission does not consider an application complete until a payment of notification fees is received and all the necessary information is submitted.”
CFTC has said the commission sent an invoice to the parties involved for the payment of merger notification fees.
“We are still waiting for the payment,” said Charlotte Wezi Malonda, CFTC executive director in an e-mail response.
She also said NBM and Indebank merger investigations were also “stopped” because the two parties submitted incomplete application papers.
Malonda said according to the Competition and Fair Trading Act, CFTC was required to make its determination within 45 days from the day of receiving an application for authorisation of a merger.
“However, if the application has some incomplete information that the parties are required to submit, the clock stops ticking. It starts ticking upon receipt of the information requested,” she said.
Malonda further said the commission can only start investigating a merger after parties have complied with all the requirements for notification, including payment of the relevant fees.
“Therefore, parties to the NBM and Indebank merger have been advised to comply with all the requirements for their merger application to be accepted as complete,” she said.
Malonda, however, said FDH Financial Holdings fulfilled all the notification requirements and investigations into the impact of the proposed merger on competition were at an advanced stage.
“Once investigation has been concluded, the Board of Commissioners will meet to consider the application and make a decision,” she said.
In a separate response, NBM corporate affairs manager Annie Magola said while NBM appreciates the important role that CFTC plays in transactions of this nature, all the bank wanted was “clarification on one or two issues”.
“NBM acknowledges that the CFTC needs to do some work before the transaction can be fully completed for which a reasonable administrative fee must be paid to CFTC,” said Magola
“Unfortunately, given the nature of the transaction, it would not be appropriate to discuss such matters in the press,” she added.
Magola said dialogue between the relevant parties was ongoing, saying it was in the interest of everybody that the process is finalised sooner rather than later.
“While waiting for the clarifications sought, meticulous planning is being done in the background to mitigate [impact] of the delays being experienced. The Reserve Bank of Malawi [RBM] as NBM’s regulator expects us to complete the merger within the timelines stipulated to us,” she said.
RBM spokesperson Mbane Ngwira on Monday said while the RBM has a Memorandum of Understanding (MoU) with CFTC on approving mergers, in some cases CFTC would work independently of RBM.
“The issue is on how to determine the turnover. We did our own assessment, but we would not be involved in CFTC assessment,” he said.
On his part, Ministry of Finance, Economic Planning and Development spokesperson Nations Msowoya said while it is indeed true that Treasury has been meeting NBM, their discussions have not been about the said waivers, but rather on general matters of development of the financial services and the economy in general. n