FBC Holdings submits recapitalisation plan

HARARE - Zimbabwe Stock Exchange-listed diversified financial services provider FBC Holdings Limited (FBCH) says it has submitted a fresh recapitalisation plan to the Reserve Bank of Zimbabwe (RBZ) following the extension of the $100 million deadline to 2020.

John Mushayavanhu, FBCH group chief executive told shareholders at the company’s annual general meeting on Thursday that the financial services firm was in a solid position and would be able to meet the requirements.

“We have submitted our recapitalisation plans to the central bank and its plan that has been approved by our board,” he said.

“You will recall that last year, we were going to merge the bank and the building society but when the new milestones were changed by the central bank, we decided that the bank was going to remain stand alone and the building society was also going to remain standalone and this is what we have envisaged in our plan,” added Mushayavanhu.

This comes as the deadline for all financial institutions to submit their comprehensive re-capitalisation plans to meet Cabinet-approved levels is just a few days away.

Commercial banks were initially required by the central bank to have minimum capitalisation of $100 million by 2014, but this was later extended to 2020.

The RBZ extended the capitalisation deadline by six years after noting that the banking sector was generally stable in spite of the various underlying macro-economic challenges and institution specific weaknesses.

Economic analysts, however, asserts that a few institutions may fail to submit acceptable re-capitalisation plans, having failed to source funding or strategic alliances, with Capital Bank having relinquished its licence at the beginning of this month.

Mushayavanhu noted that the core capital of the FBC Bank and Building Society were  well in excess of the current Reserve Bank minimum requirements.

“Our plan is indicating that at a minimum growth of about five percent in profitability, both Strategic Business Units will be able to trade themselves into compliance by year 2020.

“We have done a sensitivity analysis of our plan and in the event of a 10 percent annual decrease in profitability, for both the Bank and the Building Society through to 2020, we will proceed to merge the two units and the merged unit will still meet the required minimum capital,” he said.

He noted that the worst case scenario would have seen the group consider merging the bank and the building society which would boost capital levels to $140 million or dispose of its stake in asbestos products manufacturer Turnall to meet the minimum capital requirements.

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