Allied Bank courts investors

HARARE - Newly-rebranded Allied Bank is courting potential investors to enable it to meet the central bank’s minimum capital requirements.

Farai Mutamangira, the group’s chairperson, said they are currently in negotiations with two equity partners.

“The bank is confident that these negotiations will be successfully concluded,” he said, adding that this will capacitate the group to raise its capital to at least $25 million.

In July last year, the Reserve Bank of Zimbabwe (RBZ) ordered banks to increase their capital to a minimum $100 million, in a phased manner.

The institutions were supposed to raise their capital to $25 million by December 31, 2012, then up it to $50 million by June this year and $75 million by December.

Eventually, the banks are expected to reach $100 million minimum capital by June 2014.

According to RBZ’s 2013 monetary policy, Allied Bank’s capital stood at $15,8 million as at December 31, 2012.

Mutamangira said: “Going forward, the bank will work on a strategy of bringing in other equity partners in raising additional capital to strengthen its balance sheet and to meet capital requirements stipulated by the RBZ.”

If negotiations are successful, the new investors are also expected to enhance Allied Bank’s branch network and IT facilities, mobilise deposits and lines of credit.

Formerly Zimbabwe Allied Banking Group (ZABG), Allied Bank has made some significant strides in the market following a $22,5 million fresh capital injection by Trebo and Khays Private Limited last year.

ZABG was exposed with a negative capital of $15,35 million and efforts to attract foreign investors to rescue the bank were futile until Trebo and Khays’ intervention.

The bank was also under pressure to comply with the $12,5 million minimum capital set by the central bank then.

Since acquisition last year, the bank has increased its branch network to 24.

Mutamangira said the bank’s future plans hinged on retail banking, focusing on individual and small to medium enterprises.

“In this sense, the bank has been working on developing new products, improving branches and upgrading the ICT system, for the convenience of customers,” he said.

“These efforts will have a positive impact on the performance of the bank in 2013 as customers access a diverse range of product offering and improved service delivery.”

Stephen Gwasira, Allied Bank’s chief executive, said the bank regained 76 percent of its lost business in 2012, with deposits closing the year 13 percent above 2011 levels.

Last year, the bank’s total asset base grew by 160 percent to $40,6 million and shareholders’ equity grew by 252 percent to $16 million.

“The year under review saw the effective implementation of cost management strategies that resulted in the Bank’s operating expenses declining by 18 percent,” said Gwasira adding that the institution witnessed reductions in administration costs (33 percent), computer costs (22 percent) and staff costs (21 percent).

The bottom line for the full year to December 2012 was an operational loss of $4,1 million and a comprehensive profit of $903 000 compared to a comprehensive loss of $2,7 million recorded in 2011. - John Kachembere

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