Malawi Stock Exchange (MSE)–listed NBS Bank has called for patience from the public and shareholders on the execution of rights issue saying the bank will soon announce the timeline on the proceedings of the move.
NBS Bank board chairman Vizenge Kumwenda in an interview on Tuesday, without disclosing the date for terms of the rights issue said the bank’s transaction advisors are currently working on the issue and will in due course announce the terms.
Shareholders of the bank last year endorsed a resolution made by the directors of the bank to issue rights whose funds are aimed at helping the bank meet regulatory requirements.
Through the rights issue— an issue of rights to a company’s existing shareholders that entitles them to buy additional shares directly from the company in proportion to their existing holdings, within a fixed time period— the company intends to raise K10 billion.
However, in recent months the bank’s minority shareholders have accused the bank for not being transparent in the execution of the rights issue threatening to take legal action should the bank continue to be silent on the matter.
Representatives of the minority shareholders Frank Harawa and Chandrakant Makadia recently told Business News they feel the bank is being unjust in the way it is handling the process of the rights issue.
“The bank has not communicated any thing since the first announcement of the rights issue. Looking at the calendar, pressure is still mounting on us on where we would get the money to buy the additional shares.
“We have a lot of unanswered questions which we hoped the bank would have addressed by now,” said Makadia.
The minority shareholders’ representatives said the shareholders fear most of them are not going to participate in the rights issue because there is not enough time to raise this capital at once, hence, they will be diluted.
The bank plans to raise the money to meet the minimum capital requirement per Basel II, a directive that requires that banks’ Tier 1 capital and total capital ratio to be at 10 percent and 15 percent, respectively.
But Kumwenda said there is a lot of work going on behind the scene such as consultations with the regulator and other stakeholders on the move.
“We know our shareholders and public are anxious to hear about that. Pronouncements will be made soon on how this process will go.
Unfortunately, this is a heavily regulated process in the sense that issues of announcements need to be made by our transaction advisors so all we can say is the time is nearer when the announcement will start being made,” he said.
The bank, a subsidiary of financial services and general business conglomerate Nico Holdings Limited has been sailing through turbulent waters for some time now.
In a sector where some players are reporting multi-billion kwacha profits year-in and year-out, NBS Bank has been posting losses.
In 2015, the bank reported an after-tax loss of K195 million and in the year ended December 31 2016, it posted a record loss of K4.3 billion.
NBS Bank has attributed the losses largely to declining interest income due to reduced lending in a high interest rate environment.