FDH Financial Holdings Limited is insisting on recouping about K1.2 billion from the amount it paid for the purchase of Malawi Savings Bank (MSB) following claims the company was overvalued.
Chief Executive Officer for FDH Financial Holdings Limited, Thom Mpinganjira said they were still in discussions with government on the issue and expressed desire to resolve the matter without any legal action.
Meanwhile, the company has injected K6.6 billion (about US$ 9.1 million) in FDH Bank Limited in the first phase of recapitalization following the acquisition of the MSB which was subsequently integrated into FDH Bank.
Mpinganjira while revealing that he was not happy with how former MSB management cheated him on the deal through fraudulent information, his company is expected to spend about K10.7 billion (US$ 14.7 million) by 30th June this year on acquisition, integration, stabilization, optimization and rebranding of FDH Bank Limited.
“FDH Financial Holdings Limited invested K5.1 billion on the acquisition of Malawi Savings Bank Limited, K337.5 million on the ESOP Scheme, while the integration, Stabilization, optimization and Rebranding processes have cost FDHFHL K4.9 billion, with an additional K400 million expected to be spent to 30 June, 2017,” explained Mpinganjira during a news conference at FDH offices in Blantyre.
He said following a review of the bank’s capital requirements as at 31st December, 2016, FDH Financial Holdings Limited has on 31stMarch, 2017 injected K6.6 billion in FDH bank Limited with K1.1 billion of the money spent on restructuring of the Group that has led to FDHFHL acquiring 100 percent of FDH Money Bureau Limited from FDH Bank Limited.
“The balance K5.5 billion is direct equity injection. This is the first phase of the recapitalization of the bank. The second and final phase will be completed on 31 May, 2017 through an additional capital injection of K5 billion ahead of the 30 June, 2017 deadline set by the Registrar of Financial Institutions in Malawi.”
By 31 May this year FDHFHL is expected to have injected total of K11.6 billion in FDH Bank Limited a capital which Mpinganjira said would enable the bank to comfortably comply with Basel II requirements and compete by continuing to offer innovative products on the market such as recently launched unique DFH Mobile.
Mpinganjira added: “In total, including acquisition, integration, stabilization, optimization and recapitalization, K26.7 billion (US$30.7 million) will have been invested by 30 June, 2017, repositioning FDH Bank as a key player on then Malawi banking market.”
Then investment being made is in line Clause 10 of the agreement contained Post-Completion Undertakings by FDHFHL under the signed share sale, purchase and investment agreement the banking group made with government through Public Private Partnership Commission (PPPC) with regards to the acquisition of MSB.
Commenting on the fraudulent behavior of former MSB management, Mpinganjira defended government, arguing it was the team that was managing the bank that cheated his company by providing inaccurate information.
“Yes I am still not happy with the figures that we were told. We were not cheated by government because just like us it relied on information provided by those in management of the bank. FDH and government are both victims here,” he said.
Mpinganjira defended his institution saying it exercised due diligence though had limited time but accepted some of the risks they took in acquiring the bank which was on its death bed overburdened by toxic loans obtained by politicians.
Government is refusing to pay back the demanded K1.2 billion.
“We knew the risks but we don’t regret acquiring the bank. Our anger comes from the fact that MSB management cheated and we can’t accept that. We are still talking and we are hoping to resolve the issue.”
Following the acquisition of MSB, FDH Bank Limited cemented its position as largest financial institution in Malawi by footprint with 53 branches and points of representation in all 27 districts as well as 91 Auto Teller Machines (ATMs) countrywide.
The bank remains to be first to develop and launch mobile banking application.
Malawi government now holds only 25% shares in FDH Bank Limited while FDH Financial Holdings Limited has 75%.Follow and Subscribe Nyasa TV :