CUTS chairman Love Mtesa said the sale of Finance Bank to First National Bank (FNB) raises a number of questions and uncertainty.
“If the several reports in the media on the issue are anything to go by, the general view is that the sale of the bank to FNB was not done in an appropriate manner. And this view is justified as events preceding this sale raise eye-brows,” he said.
Mr Mtesa said this in a statement issued in Lusaka recently.
He also called on Government to strengthen the interface between the Competition and Consumer Protection Commission (CCPC) and BoZ at operational level to curb actions that might affect competition in future.
He said for a vibrant, dynamic and competitive market system to be effective it requires a sound regulatory framework across the board that ensures that the tenets of competition benefit the competitive environment and the consumer welfare vis-à-vis promoting economic growth.
Mr Mtesa said the issue is not about the actual sale of Finance Bank or the amount tendered for the bid, but how the whole process was managed by BoZ.
“As an adage says, it is better to understand the disease than the symptom. The embryonic of this whole saga springs from how BoZ handpicked First Rand to manage the affairs of Finance Bank when it was declared unfit after the allegedly breaching of the Banking and Financial Services Act,” he said.
He said of interest in this development is that FNB in Zambia is a subsidiary and a product of First Rand’s greenfields strategy which is part of the group’s expansion into Africa.
Mr Mtesa said this implied that a competitor’s parent company was granted permission to preside over Finance Bank’s affairs, on the understanding that the parent company, First Rand, would not divulge any classified information to its subsidiary.
“As long as other banks knew that FNB was privy to the affairs of Finance Bank, they would not be willing to buy the bank. It is not clear whether this became the case and BoZ faced difficulties in selling the bank to another bank besides FNB. Whether this was the case or not, the BoZ created this mess by allowing interested parties to manage the affairs of a failing bank,” he said.
He said Finance Bank was already compromised after a competitor had the privilege of gaining access to its classified information.
Mr Mtesa said the proliferation of banks in Zambia, now totalling more than 17 since the economic reforms in the 90s, is expected to guarantee a highly-contestable bidding process, with local firm participation.
He said the K27 billion floated by FNB to acquire some of the shares could have favoured a local bidder as this could have retained and guaranteed a fair participation of local entrepreneurs in the seemingly competitive sector.
“But alas, there was not much interest from local firms as other foreign banks such as the First Alliance Bank, Eximbank of Tanzania, I and M Bank Limited from Kenya, JM Capital and Quantile Capital, both from South Africa who also expressed interest in acquiring Finance Bank,” he said.
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