Bob Diamond's gamble on the Finance Bank of Zambia
The former Barclays boss’s Atlas Mara vehicle finally has admitted it is in talks to buy tycoon Rajan Mahtani’s Finance Bank of Zambia, an organisation that has been mired in controversy for years and was even in 2010 seized by the country’s central bank. Despite Finance Bank’s rocky history, Atlas is looking at paying a chunky $60 million (£39.2 million). (Read more)
Atlas Mara will probably combine Finance Bank and Bank ABC and rebrand into a new entity. This deal will propel the combined Finance Bank – Banc ABC entity into the top 5 commercial banks by asset size, ceteris paribus. Though, First National Bank (FNB) will have a lot to say about that before the year is over.
There will be some overlap in staff between the two banks which will see some employees lose their jobs. Organizational cultures, financial and IT systems will need to be integrated (or overhauled!).
This deal also means that Zambia National Commercial Banks (LuSE: ZANACO) and Investrust Bank (LuSE: INVESTRUST) remain the sole domestically-owned banks. If you really want to stretch it you can throw Indo-Zambia bank in there which is 40% owned by the Zambian government.
It will be interesting to see if this deal will shake up status-quo in the Zambian banking industry moving forward. The market is small but has been growing at a good pace. Unfortunately, there hasn’t been enough innovation in the sector to take advantage of cash-flows generated in the informal economy as well as financed emerging sectors.
And what’s next for former Finance Bank Chairman and majority owner Rajan Mahtani?
Zambia 'Ease of Doing Business' ranking improves from 111 to 97 in 2016 World Bank report
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *