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BancABC secures $125m

Business
Pan African banking group BancABC has secured over $125 million in medium-term loans from development financial institutions (DFIs) for on-lending to its customers, the parent company said yesterday.

Pan African banking group BancABC has secured over $125 million in medium-term loans from development financial institutions (DFIs) for on-lending to its customers, the parent company said yesterday.

BY NDAMU SANDU

This comes as its parent company, Atlas Mara, has injected $100 million into the group in fulfilment of a commitment it made last year to boost the operations.

Atlas Mara — co-founded by ex-Barclays Plc chief executive officer Bob Diamond and billionaire entrepreneur Ashish J Thakkar — acquired a 98,7% shareholding in BancABC last year.

In a statement accompanying Atlas Mara’s financial results, chief executive officer John Vitalo said DFI funding enhances the ability of banks to compete effectively and extend credit, particularly to small and medium enterprises (SMEs), as a result of the positive impact on the costs of funds.

Vitalo said Atlas Mara provided assistance to BancABC in obtaining a new ₤65 million facility with the European Investment Bank. He said BancABC had also secured a $7,5 million line of credit from World Business Capital. The line of credit has a seven-year tenor and was signed for on-lending to SMEs.

Two weeks ago, African Development Bank Group (AfDB) and BancABC signed a $50 million multi-currency line of credit with a seven-year tenor to BancABC and its subsidiaries in Botswana, Mozambique and Zimbabwe.

“Transactions such as these, which total more than $125 million of long-term funding, will enhance BancABC’s competitiveness and reach,” Vitalo said.

“The company is focused on being a ‘partner of choice’ with respect to designing programmes and ensuring monitoring and evaluation mechanisms consistent with DFIs’ mandates.”

BancABC has operations in Zimbabwe, Zambia, Botswana, Tanzania and Mozambique.

Atlas Mara is pursuing an acquisition-led business model focused on creating an innovative, customer-centric financial institution that provides wholesale and retail finance services to corporations, SMEs and individuals in sub-Saharan Africa.

Last year, the group acquired BancABC, BRD Commercial in Rwanda and increased its shareholding in a Nigerian bank to 29%.

Vitalo said in addition to the on-boarding of new members of the BancABC senior team, Atlas Mara was working closely with the BancABC management team on a series of initiatives such as reviewing of all elements of the credit process lifecycle.

This is meant to ensure a platform for sustainable growth and the identification and implementation of numerous revenue enhancement initiatives, particularly in relation to cross-selling and account management, pricing strategy, non-performing loans recovery and deposit mobilisation.

“The opportunities that have been identified are significant and will drive enhanced profitability at BancABC going forward,” Vitalo said.

Vitalo said Atlas Mara injected $100 million into BancABC in two phases, in compliance with the commitment it made when acquiring the banking group. The injections came in tranches of $27 million and $73 million in December.

In the outlook, Vitalo said Atlas Mara “will continue to execute its plans for safeguarding, integrating and growing its operating businesses and investments while also continuing to evaluate acquisition opportunities in its existing, as well as other, attractive sub-Saharan African markets”.

“In connection with our acquisition-oriented strategy, we may seek external financing during the course of 2015, remaining, at all times, cognisant of our cost of capital and desire to deliver strong returns to shareholders,” he said.

Vitalo said growth in Zimbabwe was expected to be lacklustre in 2015 while it was difficult to forecast the near-term economic outlook in Nigeria. He said Atlas Mara’s other countries of operation were expected growth rates of 4% to 8% this year.