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FBC Holdings says the acquisition of Standard Chartered Bank Zimbabwe (SCBZ) will result in the creation of a larger, diversified banking portfolio with a combined asset base and geographical reach that is more resilient and competitive in the face of industry-wide challenges such as regulatory compliance and digitisation.
The group is now moving to seek shareholder approval at an extra-ordinary general meeting to be held later this month for the transaction to acquire the entire shareholding of SCBZ.
The two parties have since signed a sale and purchase agreement, which will see FBCH acquire 100 percent of the shareholding in SCBZ and, by extension, the custodial services business that is wholly owned by SCBZ.
As part of the agreement, FBCH will also acquire an economic interest in Africa Enterprise Network Trust, whose main asset is a 20,7 percent shareholding in Mashonaland Holdings.
FBCH said in a circular to shareholders that if the proposed transaction is successfully concluded, it will own 100 percent of the shareholding directly in SCBZ and indirectly in SC nominees and the beneficial interest in AENT.
“This will result in FBCH owning two commercial banking licenses through FBC Bank and SCBZ and two custodial services business licenses through FBCB custodial services and SC nominees,” the group said.
It was added that, as part of the post-acquisition plan, FBCH will optimize its commercial banking operations, culminating in two major divisions in the form of the Wholesale Banking Division and the Consumer Banking Division.
Standard Chartered is a leading regional and international bank with more than 150 years of experience globally, and the bank has been present in Zimbabwe for more than 130 years.
In April 2022, Standard Chartered PLC announced its decision to divest from a number of markets, including Zimbabwe; consequently, Standard Chartered Bank Zimbabwe Limited was put up for sale.
“Against the foregoing background and in line with FBCH’s strategy of continuously growing the business organically and through mergers and acquisitions if opportunities arise, the Board, in a meeting held in June 2022, resolved to submit a bid for the acquisition of SCBZ.
“A rigorous bidding process ensued, culminating in the group’s binding offer being accepted by the shareholders of SCBZ and the subsequent execution of the sale and purchase agreement,” reads the circular.
In terms of the rationale and benefits of the transaction, the group said it leveraged the two banking entities’ respective strengths, capabilities, and competences to create dynamic banking operations, allowing the merged entity to enhance its loan underwriting capacity and enabling the group to serve a broader range of customers across different market segments.
This will also enable the Group to achieve economies of scale and operational efficiencies by consolidating back-office operations, systems, and resources, reducing duplication, and enhancing productivity and profitability.
“This will result in the creation of shareholder value through enhanced earnings and return on equity, as well as the envisaged improved liquidity of the FBCH shares on the ZSE due to enlarged operations,” reads the circular.
The group said it will harness the competencies and capabilities of the SCBZ human capital base with exposure to international best standards into the existing FBCH culture, thereby creating a dynamic team capable of meeting the diverse needs of the group’s clients.
In addition to the 20,68 percent shareholding in MHL, SCBZ comes with an impressive portfolio of investment properties that will augment FBCH’s own vibrant portfolio.
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