Tuesday, December 1, 2020

Termination of executive management contract haunts BancABC

The termination benefits to the previous executive management of ABC Holdings, owners of BancABC increased the losses incurred by the pan African banking group during 2014. Fresh from its delisting from the Botswana Stock Exchange and the Zimbabwe Stock Exchange, ABCH has posted an attributable loss of P65 million in 2014 compared to a profit of P310 million registered in 2013.

The former directors Doug Munatsi, Group Chief Executive, Beki Moyo, Group Chief Financial Officer as well as Chief Operational Officer, Francis Dzanya sold their shares to the new owners, Atlas Mara.

At the same time, Munatsi, Moyo and Dzanya received a total of 1,743,888 Atlas Mara shares in consideration for the transfer of their shares in ABC Holdings at the time of the completion of the BancABC acquisition.

The group’s acting Chief Executive Blessing Mudavanhu said Tuesday in Gaborone that termination benefits to the previous executive management also increased the losses at head office in 2014.

High Impairments

The group’s solid performance has over the years been threatened and hampered by a significant rise in impairments. Latest financials show that all the entities of the bank registered a decline in profitability largely due to higher impairments.

“The loss in head office entities together with consolidation adjustments increased from P112 million to P372 million in the current year. This was on account of several factors including a P85 million increase in credit impairments charges on a handful of loans in Tanzania that are centrally managed, increased interest expense on funding used to bolster capital positions in subsidiaries towards the end of 2013, P69 million in fair value losses on financial investments and write-off of deferred tax assets amounting to P44 million,” read a statement accompanying the group’s financials.

Closer to home, BancABC Botswana’s attributable profit of P71 million was 53 percent lower than what was achieved in 2013. Performance was impacted by a decline in net interest margins as well an increase in impairments from P42 million in 2013 to P110 million in 2014. However, the quality of the loan book remained relatively stable with the gross NPL ratio of 3.9 percent (2013: 2.9%) and net NPL ratio of 0.7 percent (2013: 1.2%).

The highlight of the year under review was the acquisition of the majority of BancABC’s shares by Atlas Mara Limited (ATMA), which now holds 98.7 percent of the shares in the Group.

The bank’s interim executive said Tuesday that since the close of the transaction ATMA has injected a total of US $100 million into the Group. “The major benefits of this transaction include access to more funding, management depth and a stronger technology platform. BancABC will benefit from being a part of a larger Group which is poised to be a significant player in the sub-Saharan landscape.” Acting Group Chief Executive Officer Blessing Mudavanhu said.

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The Telegraph December 2

Digital edition of The Telegraph, December 2, 2020.