12 November 2012

Zimbabwe: FBC in Talks Over Turnall Stake

FBC Holdings has opened talks with a number of local and foreign consortiums regarding the sale of its 58 percent stake in Turnall Holdings, sources said last week. The financial services group gained a controlling stake in Turnall as a result of a US$8 million non-performing loan advanced to Shabanie Mashava Mines by Africa Export and Import Bank.

The loan came through FBC Bank. SMM, now closed, pledged its shares in Turnall, Steelnet Limited, under judicial management, and General Beltings, as security for the loan.

But SMM failed to repay the loan, which resulted in FBC taking over the shares.

In August, FBC said it would sell its shareholding in Turnall before the end of this year to partly raise funds to meet the Reserve Bank's new capital thresholds.

With a market value of US$27 million, FBCH shareholding in Turnall is worth US$15,6 million.

Sources within the financial group said: "Several bids have been received and we are considering which one would suit us best."

Last week, The Sunday Mail reported that a consortium of local and foreign investors from Switzerland and the United Arab Emirates was angling for a controlling stake in Turnall.

It reported the consortium was made up of a Swiss private equity firm and venture capital fund, Zurmont, and a United Arab Emirates investment firm, Augan Investments, including a local firm, Ryan Capital.

"The issue is all about raising funds to meet the required minimum capital requirements," said one source.

In July, the central bank raised minimum capital requirements for financial institutions and the commercial banks will be required to have minimum capital of US$100 million, up from US$12,5 million.

Merchant banks would be required to have a minimum capital of US$100 million, up from US$10 million. Capital levels for building societies were raised from US$10 million to US$80 million, finance and discount houses from US$7,5 million to US$60 million and US$1 million to US$5 million for micro-finance houses.

The banks will be required to be fully compliant by June 20 2014 but should meet the 25 percent of the new capital levels by the end of this year.

They will be further required to be 50 percent and 75 percent compliant by June 30 and December 31 next year.

On Friday, FBCH issued a cautionary statement advising shareholders that "the group is currently engaged in negotiations, which is successfully completed, would have material effect on the structure of the group and may have a material impact on the company's business and share price.

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