Thursday, April 25, 2024

Is Bob Diamond “Fit and Proper” for Botswana’s banking market?

Although it is fair to say he was pushed as much as he jumped, Diamond quit his plum post at Barclays Bank UK in 2012 after the British bank was accused of manipulating benchmark interest rates in that country. During his tenure as Chief Executive of Barclays, Diamond sought to boost Barclays’s profitability by combining its African operations with those of Absa Group Ltd., the South African lender in which Barclays acquired a majority stake in 2005.

Fast forward to 2013, a year after Diamond left Barclays bank, a merger between South African-based banking giant Absa Group and other Barclays operations in the region emerged, resulting in Barclays Africa. The group is now reported to be generating roughly 15 percent of Barclays’ total adjusted income. As fate would have it, Bob Diamond was planning his comeback to the banking industry, and a possible sweet revenge to his former employer, by launching a joint venture company called Atlas Mara in 2013.

His partner in Atlas Mara is Ugandan IT entrepreneur and African billionaire Ashish Thakkar, aged just over 30. In March this year, Atlas Mara announced that it would acquire sub-Saharan African bank ABC Holdings Limited (BancABC) and ADC African Development Corporation (ADC) for up P2334.81 million in cash and shares. Following the March announcement, Diamond flew into Gaborone in early April to confirm the proposed combination of ABCH, ADC and Atlas Mara.

BancABC Group CEO and founder Douglas Munatsi said at the same event that the transactions will in particular be conditional upon regulatory and government approvals. In Botswana the transaction is subject to approval by the Competition Authority which is likely to consult the Bank of Botswana which regulates the banking industry. Also in April when he was here, Diamond said that when they founded Atlas Mara, they did so with the intention of identifying and partnering with exceptional multi-country African financial services companies. This explained the proposed takeover of BancABC by Atlas Mara. Diamond also highlighted that the main objective is to build Africa’s premier financial services group leveraging on access to capital, liquidity and funding that they at Atlas Mara can provide.

Although there is no doubt that everybody heard what Diamond and his partners said in April, it remains to be seen whether the Competition Authority in conjunction with BOB will condone the takeover of ABCH by Diamond. The BOB has a strict rule of ‘fit and proper’ which is applied mainly to new directors and senior management of banks operating in the domestic market. Apart from the person’s probity and competence, in allowing any appointment of directors of banks, BOB’s ‘fit and proper’ rule also looks at the person’s background evidences integrity, uprightness, and honesty.

Efforts to get a comment from the Bank of Botswana on the matter could not bear fruit for the past two weeks. Sunday Standard had sent the bank a few questions on the matter for purposes of clarity.

Still within the last two weeks, the Director of Competition and Research Analysis at the Competition Authority (CA) Botswana, Dr Mokubung Mokubung told Sunday Standard that his entity will indeed consult with BOB before making a final decision.

As industry players await the CA decision, it is will be worthy keeping an eye on the matter to see what impact the decision made by other Competition Authorities and regulators of the banking industry in which ABCH operates will have on the decision made by the Competition Authority Botswana. BancABC has operations in Botswana, Tanzania, Mozambique, Zambia and Zimbabwe. According to section 57(3), of the Competition Act, any person, including a third party not party to the proposed merger, may voluntarily submit to the inspector or the Authority any document, affidavit, statement or other relevant information in respect of a proposed merger.

As a result, the Competition Authority indicated in early June that it is seeking stakeholder views for or against the proposed merger, which was to be sent within 10 days from the date of the first publication. What remains to be seen though is whether Bob Diamond will be declared ‘fit and proper’ for the domestic banking industry.

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