Listed banking giant ZB Holdings has issued another cautionary statement as they continue to try and find a solution between them and a shareholder of their subsidiary.
In a statement, the bank wrote, “Further to the cautionary statements dated 20 June 2022, 22 July 2022, 31 August 2022, 30 September 2022, and 17 November 2022, shareholders are advised that negotiations with one of the shareholders are still on going for a potential acquisition of a control block of securities, which if concluded successfully, may have a material effect on the Company’s Securities price.”
This comes as ZB Holdings is trying to merge it’s Bank with the ZB Building Society in order to meet the minimum regulatory capital as prescribed by the Reserve Bank of Zimbabwe.
It Is a regulatory requirement for a banking license. Banking institutions are required to have a minimum capital of US$ 30 million and building societies or mortgage lenders are required to have minimum capital of US$ 20 million
ZB proposed to merge its banking division with its mortgage lending unit to meet the minimum capital requirement. That effort, however, hit a snag because of an ongoing shareholder wrangle between an investment vehicle belonging to veteran banker Nicholas Vingirai called Transnational Holdings Limited which has a direct holding in Intermarket Holdings Limited which subsequently controls the building society or mortgage lender and ZB Financial Holdings.
Vingirai, through Transnational Holdings Limited, insists that the merger between the bank and the building society/mortgage lender can only take place once the government of Zimbabwe brokered resolution between Transnational and ZB Financial Holdings over what he called the scandalous and fraudulent acquisition of Intermarket by ZB Financial Holdings is fully implemented.
The dispute between the two parties is longstanding and began as far back as 2006. That is about 16 years ago and there really is little prospect of that dispute and subsequent resolution brokered by the government being implemented in time to meet the RBZ deadline.
In 2004 after the banking crisis that claimed the scalps of most of the indigenous banks in Zimbabwe Nicholas Vingirai had to leave the country and spent seven years in self-imposed exile after he was charged with contravening the country’s exchange control laws.
He was absolved in 2011 of the charges of externalization of foreign currency however, the government had expropriated his firm Intermarket Holdings in 2006. Since that time Vingirai has been on a crusade to recover his assets which are now in the centre of the dispute. ZB Financial Holdings comprises of assets that belong to Transnational Holdings Limited. For the assets that were annexed from Vingirai, the government duly transferred 22.7% of the shares in ZB Financial Holdings to the veteran banker.
More shares are due to Vingirai’s investment vehicle so that they correspond to the value of Intermarket Holdings at the time that the government took it over. In July 2021, 11% of ZB Financial Holdings shares were supposed to be transferred to Transnational Holdings Limited. This is pending. The dispute has been long drawn out with all kinds of proposals being made, ranging from demerging Intermarket from ZB to allocating shares to the veteran banker – Harare