LIVINGSTONE MARUFU
A possible merger between leading financial services institutions, CBZ Holdings and ZB Financial Holdings, requires more time than expected as a number of issues need to be finalised, a competition body has said.
It is understood that CBZ has put its house in order but ZB still has shareholding issues that need to be cleared following an impasse with one of the biggest shareholders.
The Competition and Tariff Commission (CTC) is said to be having some serious nightmares with this potential deal, amid fears it could contravene competition rules.
There are concerns that such a merger between the two institutions will control a huge chunk of the market share and could destabilise the banking industry.
With CBZ having successfully acquired a stake in First Mutual Holdings, its merger with ZB will see the group with an asset base of about US$2.5bn.
A source close to the developments told Business Times that the merger proposal has already been submitted to the CTC board for vetting.
“We believe that CTC may need up to more than 12 months unless something extraordinary comes up to expedite the proposed deal,” a source said.
CBZ and ZB recently issued cautionary statements of a corporate action that may have a material impact on the value of the company’s shares.
CBZ Holdings said it was “still engaged in negotiations for a potential acquisition of a complementary business”.
ZB said negotiations with one of the shareholders are “still ongoing for a potential acquisition of a block of securities”.
CBZ and ZB have a combined network of more than 100 branches across the country.
This may lead to the anti-competition ground as this may create or enhance the ability of the remaining firms to act in a coordinated way on some competitive dimension, experts said.
It is believed that in other countries before a large merger happens, the antitrust regulators such as the CTC and the Department of Justice meet to find a common ground but in Zimbabwe that is not the case.
The Commission may allow the merger to go on a common condition that the transaction will be allowed if the firm agrees to sell off certain parts.
CBZ Holdings, which owns CBZ Bank and other entities, is the core of the proposed merger.
It will have five major divisions: banking, insurance, investment, property, and agriculture.
The post-merger entity to be created through the acquisition will rival Old Mutual Zimbabwe.
The proposed merger comes after CBZ acquired a 31.22% stake in FMHL from the 66.22% stake held by the National Social Security Authority (NSSA).
It is understood that the proposed merger would be led by CBZ board chair Marc Holtzman, a U.S. international banker.
Last year, the NSSA disposed of its 37.79% stake in ZB Bank to a mysterious buyer.
The merger could see the buying out of ZB’s second-largest shareholder, Nicholas Vingirai who holds 21.44%.
However, it is understood that Vingirai has not been approached with an offer to dispose of his stake in ZB.
Observers said Vingirai stands between ZB and CBZ merger as his decisions will determine how ZB will progress in merging with other players in the merger.
“If he does not cooperate his stake may be bought out but he may frustrate the processes,” a source said.
Already, ZBFH is accelerating the acquisitions of minority interests in ZB Bank Limited, ZB Building Society, and Intermarket Banking Corporation in a bid to take control of all the subsidiaries under ZB for easy administration.
