18 July 2014

Zimbabwe: AfrAsia to Retrench, Cut Branches

AfrAsia Zimbabwe Holdings Ltd intends to lay off staff as part of efforts to restructure and consolidate the business, a company official said.

Company spokesperson Sekai Chitemerere this week said in line with the group's plan to review the business, AfrAsia is streamlining its operations in response to the tough economic and operating environment.

Chitemerere said the banking group was in the process of reducing its branch network, adding this would see the group offering staff voluntary retrenchment.

She said the streamlining exercise would see improved operational efficiencies.

"In line with our previous updates to our stakeholders, AfrAsia Zimbabwe Holdings Ltd has an ongoing exercise to extensively review its business and its structure in response to the economic and operating environment," Chitemerere said.

"This has necessitated that the group streamlines its operations to improve operational and business efficiency and to ensure it is positioned to capitalise on existing and emerging growth opportunities in the financial services sector and economy in general."

She said the group was consolidating its operations and reviewing its cost structure and product portfolio.

Chitemerere would not however be drawn into commenting on how many workers would be retrenched.

But management said although the group had made a severance offer, it would not allow people with key skills to go.

"These initiatives will result in a reduction of the branch network which will necessitate a voluntary staff separation offer.

The group has already started engaging with staff on the offer and is yet to confirm the number of staff and branches that will be affected as a result of this exercise," Chitemerere said.

The group is confident streamlining initiatives will result in a much leaner business.

"The group is confident that these initiatives will result in a much leaner and efficient business, enable it to manage costs, grow revenues from relevant and profitable product lines and continue to provide an efficient and customer focused service to its valued clients, while contributing to the economic development of Zimbabwe," she said.

AfrAsia refuted market speculation the financial services group was mulling a disposal of its asset management business.

This came amid speculation the banking group had shortlisted several buyers for its asset management business.

"The group has not made a decision to sell any of its units and should this be logical in line with the ongoing review if operations, stakeholders will be kept updated," she said.

AfrAsia recorded a US$174 862 profit in the half year to December 2013, recovering from a |US$16 million loss incurred in the 18 months to June 2013.

The company said the performance was due to a successful rights issue and clean-up of non-performing loans.

AfrAsia's flagship banking arm -- AfrAsia Bank Zimbabwe -- is expected to offer offshore wealth management products and solutions while offering an investment and funding gateway to and from Asia and the international market for its clients buoyed by its shareholder, AfrAsia Holdings Ltd, a Mauritian outfit.

Last year AfrAsia Holdings Ltd (AHL) shored up its shareholding in AfrAsia to 54% from 35% after acquiring a 30% stake previously held by KFHL founder, Nigel Chanakira.

AHL, now the major shareholder in AfrAsia, has already injected liquidity support amounting to US$10 million to Kingdom Bank Ltd and committed to lead the rights issue to raise US$20 million with another US$80 million through private placement as the second phase.

In September 2013, Chanakira ceased to be a director of all AfrAsia subsidiaries after selling his 30% stake in the group. He has however retained the "Kingdom" trademark under the Botswana-based offshore bank, Kingdom Bank Africa Limited.

Following Chanakira's exit, AfrAsia shareholders passed resolutions that were expected to strengthen the group's financial position and go a long way in easing liquidity challenges facing the country.

At the company's extra-ordinary general meeting, shareholders passed among other special resolutions increase in ordinary share capital, consolidation of ordinary share capital, change of name and rebranding as well as issue of preference shares.

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