Malawi govt to fight K300bn Finance Bank payout as Mbeta calls it excessive

Malawi’s government is preparing a fresh legal challenge against a court-awarded K300 billion compensation package to the defunct Finance Bank Malawi (FBM), arguing that the sum is disproportionate to the circumstances of the case and places a substantial burden on the public purse.

Attorney General Frank Mbeta said he intends to seek a review of the award before a full bench of the Supreme Court of Appeal, describing the compensation as excessive.

His intervention sets the stage for the latest chapter in a legal dispute that has spanned more than two decades and raised difficult questions about regulatory accountability, constitutional rights and the financial consequences of unlawful state action.

The compensation award stems from a 4 November 2026 assessment by Supreme Court assistant registrar Ibrahim Hussein, who ordered the Reserve Bank of Malawi (RBM) to compensate FBM for the revocation of its banking licence in 2005.

While the bank had sought more than K1.1 trillion in damages, the court settled on K300 billion, including compensation for loss of business, alleged malfeasance in public office and violations of constitutional rights.

At the heart of the dispute is a decision taken more than 20 years ago when RBM revoked Finance Bank’s licence, prompting a prolonged legal battle. The bank challenged the move in court, arguing that the regulator had acted unlawfully.

Subsequent rulings found the revocation unconstitutional and opened the door for an assessment of damages.

The State has consistently maintained that any compensation should be nominal rather than punitive, contending that the scale of the award goes beyond what is justified.

Government lawyers have also pointed to language in previous court decisions which, they argue, left open the question of whether substantial damages were warranted.

For critics of the award, the case highlights the growing fiscal risks associated with litigation involving the State.

For supporters of the judgment, however, the compensation reflects the cost of unlawful regulatory action and the principle that public institutions must be held accountable when they infringe constitutional rights.

The case has travelled through multiple courts and legal reversals since 2005.

Finance Bank entered voluntary liquidation in 2006, yet the dispute over the consequences of its closure has endured.

A Supreme Court judgment delivered in February 2026 ultimately reaffirmed that the licence revocation was unconstitutional, paving the way for the compensation assessment now at the centre of the government’s challenge.