Harare — FBC Holdings Ltd directors have been given the nod to raise US$8 million through a rights issue offer to recapitalise two of the group's subsidiaries, FBC Building Society and FBC Reinsurance Limited, to meet the Reserve Bank of Zimbabwe minimum capital thresholds.

It was agreed at an Extraordinary General Meeting held on Monday that US$5 million of the rights issue proceeds be directed towards FBC Building Society and US$2,5 million to FBC Reinsurance.

However, the group's flagship, FBC Bank, and its securities subsidiary are adequately capitalised in line with central bank thresholds.

The rights issue will be on the basis of 63 new rights offer shares for every 100 shares already held and these would be allotted at a subscription price of US0,035 cents per share.

The rights issue shares will be listed on the Zimbabwe Stock Exchange on May 17 and Genesis Investment Bank Limited will underwrite the rights issue.

The Reserve Bank of Zimbabwe set the minimum capital requirements for commercial banks at US$12,5 million; building societies and merchant banks at US$10 million; finance and discount houses at US$7,5 million; and US$500 000 for asset management.

The deadline to meet these capital requirements was set for March 31 and some institutions had to seek for an extension from the central bank.

FBCH shareholders also passed a resolution to convert the nominal value of the shares from Z$0,01 to US$0,00001 ordinary shares.

As a special resolution, shareholders approved the redenomination of the authorised and issued share capital from 800 million ordinary shares of Z$0,01 each to 800 million ordinary shares of US$0,00001 each.

Market watchers indicated that the rights issue is likely not to be fully subscribed since all companies that have been on the market failed to record more than a 70 percent subscription rate.

OK Zimbabwe is the only company to have achieved 70 percent subscription rate after NocozDiamond, African Sun, CFX Financial Services and Starafrica failed to pass the 70 percent mark.

For the year ended 30 December, FBC Holdings recorded a tax profit of US$5 million closing the year with deposits amounting to US$95 million with over 70 000 accounts.

The group, which currently operates 13 commercial banks and six building society branches, recorded total income of US$30,4 million and profit before tax of US$6 million.

The group said fees and commissions mainly drove total income from the bank and the building society, net trading income from FBC Reinsurance and Turnall.

During the course of the year, the group, through the bank, acquired 59 percent of Turnall Holdings following realisation of collateral on a non-performing debt.

Following the acquisition of Turnall, in line with International Financial Reporting Standards, the financial statements of the company were incorporated into the group's financial results statements from the date of acquisition.

FBC was hit by a spate of fraud cases and robberies early this year resulting in a net loss estimated at US$400 000

Despite the fraud cases, the group and the bank are still in a sound financial position with total shareholders' funds amounting to US$49 million and US$27 million for the group and the bank.