- More than a year after the multinational banking group said it was exiting seven markets, FBC Holdings has won the bid to acquire Standard Chartered Bank Zimbabwe.
- FBC Holdings will acquire 100 per cent of the shareholding in Standard Chartered Bank Zimbabwe Limited and, by extension, the custodial services business wholly owned by Standard Chartered Bank Zimbabwe.
- As part of the agreement, FBC Holdings will also acquire the economic interest in Africa Enterprise Network Trust, whose main asset is a 20.7 per cent shareholding in Mashonaland Holdings.
A strategic decision
FBC Holdings Limited (FBCH) has finalized an agreement with Standard Chartered Bank to acquire its business in Zimbabwe. However, this transaction remains subject to regulatory approvals, including that of the Reserve Bank of Zimbabwe (RBZ), and marks a strategic move for both entities.
Standard Chartered Bank had previously decided to divest from several markets. These include Lebanon, Angola, Cameroon, Gambia, Sierra Leone, Zimbabwe, and Jordan. Additionally, the bank has planned to exit the Consumer Private and Business Banking (CPBB) business in Côte d’Ivoire and Tanzania. Standard Chartered Bank’s business sale in Jordan came to light earlier in March this year, aligning with the bank’s strategic realignment efforts.
According to an article published by Zimbabwe Independent on January 20, 2023, five investors had submitted their bids. Notably, Zimbabwe’s biggest bank on the balance sheet CBZ Holdings and FBC Holdings, expressed interest, while FNB of South Africa also reportedly expressed interest. According to sources, another South African bank, Nedbank, was reportedly eyeing a piece of the cake through its shareholder, Old Mutual Zimbabwe. A consortium representing Zimbabwean entrepreneurs was on the bidders’ list. And with the just recent announcement, FBC Holdings won the bidding.
Terms of the Agreement
FBCH will assume full ownership of Standard Chartered Bank (Zimbabwe) Limited and its wholly-owned custodial services business as part of the agreement. FBCH will also acquire an economic interest in Africa Enterprise Network Trust. This includes a significant 20.7 per cent shareholding in Mashonaland Holdings.
Interestingly, FBCH has committed to retaining all Standard Chartered Bank Zimbabwe employees. That retention will ensure continuity and a smooth transition for clients and staff. The two banks will collaborate closely for a seamless integration process in the coming months.
Sunil Kaushal, Regional Chief Executive Officer for Africa & the Middle East (AME) at Standard Chartered, emphasized the strategic alignment of this agreement with the bank’s global strategy. He stated that Standard Chartered’s business sale in Zimbabwe to FBCH will enhance operational efficiencies, streamline complexity, and drive scale. The bank seeks to serve its clients better and support their evolving needs. Consequently, the bank will redirect resources within the AME region to areas with significant growth potential.
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The acquisition is a significant step
Dr John Mushayavanhu, Group Chief Executive of FBC Holdings, highlighted the acquisition as pivotal. The move will help the FBCH consolidate its market share, expand its customer base, and enhance its competitiveness in a dynamic banking landscape. The FBCH will combine the strengths and expertise of both institutions to effectively meet its clients’ ever-changing requirements.
Dr John Mushayavanhu, Group Chief Executive of FBC Holdings Limited, expressed his satisfaction with the agreement. He acknowledged Standard Chartered Bank’s esteemed reputation as a leading regional and international institution with a remarkable global track record of over 150 years. Furthermore, he emphasized FBC Holding’s prominent position as a financial services institution in Zimbabwe and the region. The bank boasts diversified interests in commercial banking, insurance, re-insurance, micro-finance, stock-broking, and mortgage finance. Dr Mushayavanhu reiterated that the collaboration between these renowned institutions would undoubtedly benefit clients, employees, and shareholders, ultimately adding significant value to the market.
FBC Holdings’ first quarter 2023 interim results
According to the company’s 2023 first-quarter interim report, FBCH Limited had a total income of $152 million as of March 31, 2023. The Group maintained a prudent approach to expense management. Thus, it achieved a cost-to-income ratio of 41 per cent in the period under review. Subsequently, the Group recorded a profit before tax of $ 89.41 million and an after-tax profit of $78.88 million. The Group’s total assets stood at $1.54 billion, with underlying shareholder funds of $281 million and a return on equity of 28 per cent.
FBC Holdings’ Share buy-back as a special resolution and AGM
FBC Holdings issued a formal notice regarding its upcoming Nineteenth Annual General Meeting for Shareholders. The meeting will take place on June 29, 2023. The potential implementation of special resolutions concerning share buy-backs is among the key agenda for the meeting.
The proposal focuses on the purchase of FBC Holdings Limited’s shares. To proceed with this course of action, the company’s directors seek authorization per section 50 of the Company’s Articles of Association and Section 128(1) of the Companies and Other Business Entities Act.
The authorization, if granted, would enable the company to buy back its shares, subject to certain terms and conditions. Notably, the purchase price of the shares should not fall below their nominal value. Additionally, the price should not exceed a 5 per cent range above or below the weighted average trading price of the company’s ordinary shares over a period of five business days leading up to the purchase.
The shares allocated under this resolution must be ordinary shares of the company. The proposal limits the number of shares acquirable. It caps it at 10 per cent of the company’s total ordinary shares currently in circulation.
The authority for share purchase under this resolution would expire on the company’s next Annual General Meeting date. Furthermore, any shares acquired through this resolution would be designated for treasury purposes, serving the company’s internal needs.
FBC Holdings Stock performance
On the Zimbabwe Stock Exchange (ZSE), FBCH closed on June 9, 2023, at a share price of $0.96, showing a 15 per cent gain compared to its previous closing price of $0.84. Throughout the year, FBC’s share price has experienced significant growth, starting at ZWL 62.00 and increasing by 400 per cent. This performance ranks FBC as the 22nd-best stock on the ZSE regarding year-to-date performance. Shareholders can be optimistic about FBC Holdings as it has gained 82 per cent in the past four weeks. The gain placed it as the 24th-best performer on the ZSE.
Over the past three months, FBC Holdings was the 20th most-traded stock on the Zimbabwe Stock Exchange. During this period, a total volume of 1.68 million shares valued at $1.08 million has been traded, with an average of 26,640 shares traded per session. The highest volume reached was 769,200 shares on June 8.
