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Capital Bank’s funding plan under threat

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SHAREHOLDER squabbles between the National Social Security Authority (Nssa) and the former Renaissance Merchant Bank (RMB) executive chairman Patterson Timba could scupper the Capital Bank Ltd’s recapitalisation plan, amid indications the bank now wants to downgrade its merchant banking licence to that of a micro-banking institution.

Sources told businessdigest this week Capital Bank (formerly RMB) shareholders were concerned by the combative approach of Renaissance Financial Holdings Ltd (RFHL), led by Timba, who own a 13% equity stake in Capital, with the remainder held by Nssa.

The sources said Nssa had found working with Timba and his associates problematic as it emerged that RFHL was still fighting to repossess the bank that it sold to the social security authority.

Timba, sources said, felt he was stampeded by Nssa into selling RMB, in which he, together with partners Dunmore Kundishora and Clementine Sibve had a controlling stake.

According to sources, Timba had written several letters to government departments complaining about how the deal was structured by Nssa to muscle him out, a move the main shareholder finds hostile.

When reached for comment, Capital Bank CEO Lawrence Tamayi denied the bank would surrender its merchant bank licence.

“That is not correct. We have not had that communication at board level, neither have we had that kind of communication with the regulator. You can verify that directly with the regulator,” said Tamayi.

“We are going to have an AGM on the 10th of October. It will give a definitive position in terms of the capitalisation of the bank and the way forward.”

However, sources said the Capital Bank board had decided to go for a low capital licence in the form of a micro finance bank.
The Reserve Bank of Zimbabwe in July last year raised minimum capital requirements for commercial and merchant banks to US$100 million from US$12,5 million and US$10 million, respectively.

The central bank said the move would minimise systemic risks in the fragile financial services sector after the collapse of Genesis and Interfin banks.

Should the central bank grant Capital Bank a micro-banking licence, the financial institution is going to target low-end customers and provide financing for housing schemes, the sources said.
“They have a plan to embark on micro-housing schemes for the low-end market,” one source said.

The source added that while Capital Bank would largely become a micro bank, it would benefit from Nssa’s deep pockets in providing housing facilities that benefit low-end clientele and other workers.

Nssa, Renaissance Financial Holdings Limited, RMB and Econet signed an agreement two years ago that saw the social security fund emerging with an 84% stake in RMB, now Capital Bank. The deal involved a combination of cash and conversion of debt into equity.

RMB was a merchant bank formerly owned by Timba, Dunmore Kundishora and Clementine Sibve.

Nssa acquired Econet Wireless Zimbabwe’s 19,7% stake in the insurance giant Afre (then owned by RMB) last year and already held more than 32% through RMB.

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