Interfin plans deposits, equity swap

HARARE - Interfin Financial Services Limited (IFS) plans a deposit to equity swap deal as part of strategies to rescue its troubled flagship subsidiary Interfin Bank.

If approved, the transaction could see the bank’s top depositors such as pension fund National Social Security Authority (Nssa) and tax collector Zimbabwe Revenue Authority (Zimra) emerge as shareholders in the embattled financial institution.

“A scheme of arrangement, which involves conversion of deposits to equity in the bank’s quoted holding company, IFS, has been proposed,” said Timothy Chiganze, IFS’ chairperson.

“…it will result in the reduction of the capital gap and strengthening of the balance sheet thereby becoming more attractive to potential investors,” he added.

Interfin Bank — placed under curatorship until June — owes major depositors a combined $70 million in deposits.

The deposits owed include Al Shams Global’s $23 million, Finance ministry’s $18 million and Nssa’s $15 million.

Zimra lost a $3 million deposit, ABC Holdings $3 million, Seed Co $2,6 million and POSB $1, 8 million.

Interfin Bank faces lawsuits as the firms have engaged the High Court in a bid to recover their deposits.

Chiganze said IFS has to date issued a total of 200 summon to recover $79,3 million in loans.

This comes as the group plans to retrench nearly half of its 300 plus workforce as part of efforts to contain costs and streamline operations.

The group’s curator, Peter Bailey of KPMG Chartered Accountants, has confirmed the development, but could not disclose further detail.

“Yes it is true (that IBC is retrenching), but I am not allowed to discuss such issues as I am prohibited from doing so by my letter of appointment,” Bailey told businessdaily.

Raymond Njanike, IBC’s managing director, refused to comment, referring questions to Bailey.

According to sources close to the development, the exercise is part of measures undertaken by the financial group to entice investors.

“Some of us are going to be served with retrenchment letters backdated to March.

They (management) are trimming down a bloated workforce to spruce up operations and try to attract investors,” said the insider.

This comes as one of IBC’s major shareholders last week told businessdaily that the group is in talks with potential investors.

“Yes we are engaging investors, but I can’t disclose them at this point in time,” said the shareholder.
However, sources say two Russian investors have expressed interest in injecting $100m plus to recapitalise the troubled institution.

Bailey, who is expected to recommend the way forward on IBC’s future at the end of the curatorship, said he was not at liberty to disclose any developments.

“My mandate is to rescue Interfin out of its crisis and it is beyond my jurisdiction to comment on the issue you have raised,” he said.

Last year, the Reserve Bank of Zimbabwe (RBZ) extended IBC’s curatorship by six months following revelations of gross mismanagement, which led to the institution’s demise. - Business Writer

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