Zimbabweans queue to withdraw cash outside the Barclays bank in the capital Harare. Picture: REUTERS
Zimbabweans queue to withdraw cash outside the Barclays bank in the capital Harare. Picture: REUTERS
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After years of bank collapses in Zimbabwe, the rare good news that a bank has been sold rather than closed should have brought some cheer.

But London-based Barclays’s sale of Barclays Bank Zimbabwe to Malawi’s First Merchant Bank (FMB) earlier in June, has received an unenthusiastic response.

Politicians in Zimbabwe are seething over the transaction — estimated at about $60m — which they argue flouts the indigenisation law.

Kudzai Chipanga, Zanu (PF)’s youth leader, asked President Robert Mugabe earlier in June at a rally in Marondera to have the bank’s sale reversed in order to allow for indigenous shareholders to place their bids.

"We are worried that Barclays is being bought by a foreign company instead of locals," Chipanga said. "This raises the risk of foreigners sabotaging us. We want to ask if there is nothing the government can do to be able to buy the Barclays stake in line with indigenisation laws. We have banks such as CBZ and we have to look at other ways on how we can have locals owning the bank."

Indigenisation minister Patrick Zhuwao did not respond to a request for comment after FMB bought the 57.68% stake that Barclays held in its Zimbabwean subsidiary.

The bank’s senior management also appears to be stung from being overlooked by its London parent company in favour of FMB.

Management is mounting a court challenge in an attempt to have the sale reversed. Barclays’ operations in Egypt and Zimbabwe were excluded from the Barclays Africa deal in 2013.

The sale of the Zimbabwean unit was part of its strategy to exit the continent. In October 2016, Barclays announced the sale of the Egyptian unit to Morocco’s Attijariwafa Bank for $500m.

In May, the British bank also whittled down its shareholding in Barclays Africa to 23.7%, after it sold shares worth about $2bn through a book build process. A further 7% stake was expected to be taken by the Public Investment Corporation at a later date.

Robin Vela, chairperson of the National Social Security Agency, which runs the Zimbabwean government’s compulsory pensions scheme and is also a major investor on the Zimbabwe Stock Exchange, said it had been keen to finance the local bank management’s bid for the parent company’s stake.

However, the agency also said Barclays plc was within its rights to sell to whomever it chose.

For Blantyre-based FMB, the purchase of Barclays Bank Zimbabwe has helped to increase its regional footprint to five countries: Botswana, Malawi, Mozambique, Zambia and now Zimbabwe.

FMB is primarily a commercial bank and offers a full range of traditional banking services, which include corporate finance and asset management. It lists among its shareholders Magni, Prime Capital & Credit, and Prime Bank.

FMB’s purchase of Barclays Bank Zimbabwe is expected be finalised in August. It still needs regulatory approval.

Zimbabwe Banks and Allied Workers Union secretary-general Peter Mutasa said the transaction had received the nod from both the Zimbabwean and Malawian central banks.

"This puts the deal on a stronger footing unless adverse and material information emerges, which could have been concealed from these authorities," he said.

You just don’t want to be in one or two jurisdictions, you want to be able to spread out because if you are exposed in one country and a downturn occurs it can hit you hard

Mutasa described the failed management bid as a "wasted chance" and warned that management "should not invoke politics for selfish gains".

Financial services sector analysts said a strong appetite for expansion into the region would remain, as the establishment of pan-African operations provided diversification of portfolios and reduced the risk associated with exposure to a single market.

Adrian Cloete, portfolio manager at PSG Wealth, said the latest ventures into the Southern African region showed that the dominant thinking in the financial services sector was geared towards entry into different markets.

"You just don’t want to be in one or two jurisdictions, you want to be able to spread out because if you are exposed in one country and a downturn occurs it can hit you hard," he said.

At about the same time as FMB was sealing its deal with Barclays for Barclays Bank Zimbabwe, Barclays Africa had its eye on the acquisition of an 80% stake in Moza Banco, as did Atlas Mara and Societe Generale.

Barclays Africa already has a presence in Mozambique, but its operations there are small and the acquisition of the Moza Banco stake would have boosted them.

But earlier in June, Mozambique’s central bank said the Moza Banco stake had gone to local pension fund Kuhanha, which would inject $138m into the bank, Mozambique’s fourth largest.

Cloete said the unsuccessful bid for Moza Banco would not be the end of Barclays Africa’s ventures in the continent, where it already has a large portfolio across 12 countries.

Bradley Preston, chief investment officer at Mergence, said the maturity of the South African banking industry lessened the prospects of significant growth at home, making the rest of Africa a potential market.

"But there is need to strike a balance between the pan-African expansion and gaining top position in those markets," Preston said.

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