14 February 2013

Zimbabwe: NMBZ Eyes U.S.$50 Million Lifeline

NMBZ HOLDINGS is eyeing US$50 million in lines of credit before the end of this year as the proposed introduction of high-profile foreign shareholders is expected to help unlock the funds. The Zimbabwe Stock Exchange-listed bank will be seeking shareholders' approval for the proposed capital raising exercise of US$16,2 million through a private placement of US$14,8 million and subordinated debt of US$1,4 million.

In a brief to analysts on the capital-raising, NMBZ chief executive Mr James Mushore said the anticipated lines of credit would see the bank extending mortgage finance, lending into the mining and agricultural sectors, as well as enhancing tenure on loans.

The NMBZ shareholders will meet on February 19 to consider the resolutions to enable the financial group to place shares with strategic foreign investors.

The capital-raising initiative is part of the bank's plan to meet minimum capital thresholds.

The Reserve Bank of Zimbabwe raised minimum capital levels for banking institutions last year, with commercial and merchant banks required to have capital levels of US$100 million from US$12,5 million and US$10 million respectively by June next year.

Minimum capital for building societies was also increased 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 institutions.

While the banks should be fully compliant by June next year, they were required to meet 25 percent of the new capital levels by December 31 last year. NMBZ is among 14 banking institutions that met the December 31, 2012 deadline.

On the second phase, NMBZ management said the capital-raising and asset disposals of the Borrowdale land in Harare and the sale of the stake in the leasing business should result in the group having capital of approximately US$45 million.

After that, the bank aims to comply with the regulatory minimum capital requirements of US$50 million through organic growth.

The group's plans to achieve compliance with the new minimum capital levels were approved by the RBZ.

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