Agribank privatisation in full swing

HARARE - Agribank says talks over the disposal of government’s 49 percent stake in the banking concern to private investors were ongoing and at an advanced stage.

“The government has commenced the privatisation of Agribank and is currently in progress in accordance with the Cabinet approval of May 2011. Under the privatisation programme, government will retain a 51 percent shareholding while disposing 49 percent shareholding to a strategic partner,” Joseph Mverecha, head of strategy, advisory services and marketing said.

“Currently, the government has floated a tender for a financial advisor, to be followed by subsequent steps, culminating in the choosing of a suitable strategic partner,” he added.

The plan to dispose the shareholding in the bank is in line with government’s thrust to foster public-private sector partnership to recapitalise state enterprises.

Mverecha said several investors had already shown keen interest in the offer.

“In addition, international investors, aware of the uncertain global food supply are keen to invest in a strategic institution that has a long- standing history of supporting agriculture and food production,” Mverecha said.

In the half-year to June, Agribank recorded a loss of $2,4 million although it’s operating income increased by 18 percent to $22,7 million.

“The major expenses of the bank were mainly in respect of the recent ICT upgrade and related expenses and operating costs associated with running a large branch network,” said Mverecha.

He said the bank has so far invested $2,5 million in ICT upgrade and branch connectivity which will see them realise the benefits of such an investment going forward.

Total assets grew by seven percent to $110,2 million while deposits increased by 13 percent to $78,2 million.

The bank’s capitalisation stood at $12,7 million by half-year ending 30 June, with government injecting $1 million against a minimum capital requirement of $100 million expected from all commercial banks by June 2014.

The bank is currently in negotiations with Industrial DevelopmentCorporation South Africa (IDCSA) to secure a second tranche of $30 million expected to be disbursed at the beginning of the last quarter of the year.

“As with the first tranche secured in 2011, the facility is targeted to benefit several productive sectors borrowers in support of economy-wide recovery,” said Mverecha.

“The second tranche would still target the same customer criteria and has tenure of six years at concessional interest rates,” he said.

This would enable the bank to support companies in agriculture and manufacturing — key sectors underpinning economic recovery.

Going forward, Mverecha said the bank’s outlook remains positive — both near-term and medium-term prospects.

“The bank has put in motion a process for comprehensive review of our operating cost and is implementing a cost containment programme that will yield visible gains to our bottom line over the next six months to December 2012 while exploring new revenue lines,” said Mverecha.

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