Botswana Building Society (BBS), one of the country’s top mortgage lenders has completed a business plan for commercial banking operation as it readies to demutualise.
BBS is in the process of ceasing to operate as a society and will soon apply for a banking licence with Bank of Botswana (BoB), which regulates the banking sector. The society said on its financial statements for the year ended 31 March 2015 that plans to convert to commercial bank are on track.
“We have since completed the business plan for the envisaged bank and I am confident that it will be a welcome addition to the market,” BBS Chairman, Cross Kgosidiile said.
He added that an application to become a company will be lodged with the Registrar of CompaniesÔÇöwhich is an important part to become a bank since the business must first change from the status of a building society.
Kgosidiile said they will submit the actual banking licence application to the central bank in October. This is however subject to shareholder approval. “We have been advised that feedback from the Bank of Botswana on the banking licence application takes up to 6 months,” he said.
“Therefore, at the maximum, we should receive a response on the application in March 2016.
Clearly, these time lines attest to the proximity of realising the BBS dream which is to become a fully- fledged bank.”
BBS currently trades under the Building Societies Act, which restricts the society from offering an array of commercial banking products. The Act does not allow the society to offer banking products offered by commercial banks.
As a preparation to become a commercial bank and operate a solid governance platform, BBS said it has enhanced its risk management policies to ensure the business is sustainable.
BBS Managing Director, Pius Molefe said they are focusing on becoming a leading home grown commercial bank.
“At the sametime, we want to remain true to our purpose of offering excellent customer service,” he said. BBS will hold a special general meeting after its Annual General Meeting (AGM). The special general meeting will discuss issues around demutualisation.
The idea to privatise has been mooted by the society for the past seven years, but was delayed by other factors.
However, with the merger of the two other states underpinned entities (BSB and BotswanaPost) the society is convincing regulators and government to allow it to increase banking products offering. BBS, which was established in 1976 with an asset base of only P4.11 million has grown its assets base and has thousands of clients.
If the demutualisation is granted, Botswana is likely to have indigenous banks as BSB/ BotswanaPost merger will also produce a Postbank.
Government wants the proposed Postalbank to be tailor-made along the lines of the giant Japanese Postal Bank or the South African Post Bank and take head on established commercial banks.
The licensed banks in Botswana are BancABC, Bank Gaborone, Bank of India, Barclays Bank of Botswana, Bank of Baroda, Capital Bank, First National Bank of Botswana and State Bank of India, Standard Chartered, and Stanbic amongst others.