ZB, Vingirai settle wrangle

......Now eyes capital preservation

July 8, 2021

RYAN CHIGOCHE

Listed financial services group, ZB Financial Holdings Limited (ZBFHL) and businessman, Nicholas Vingirai’s Transnational Holdings Limited (THL) have settled their long running legal battle with the latter withdrawing a case before the courts, Business Times reports.

The withdrawal of the Supreme Court case comes after the government ceded its stake in ZBFHL to THL.

“The long-standing legal dispute between the company (ZBFHL) and THL regarding the ownership of Intermarket Holdings Limited (IHL) was resolved by the withdrawal of THL’s appeal at the Supreme Court of Zimbabwe. This followed a settlement arrangement in which the Government of Zimbabwe ceded its shareholding in the company (ZBFHL) to THL in transactions,” ZBFHL board chairperson Pamela Chiromo said.

 

In 2004, the government through the Reserve Bank of Zimbabwe (RBZ) seized IHL, which Vingirai controlled through THL with the administration saying it was bailing out troubled banks at the height of hyperinflation.

The administration later sold IHL to ZB.

 

Assets that belonged to THL included Intermarket Building Society, Intermarket Discount House, Intermarket Life Assurance, and a considerable equity stake in Mashonaland Holdings.

Today, these form the bulk of the ZB group’s asset base.

For more than 10 years, Vingirai has been pushing for a mutual separation of the ZB and IHL, which have been operating as a single entity.

 

Vingirai felt the shareholding IHL held in the group was relatively less than it is entitled to.

 

However, a few years ago, the government and Vingirai appeared to have struck a deal after the administration offered more than 20% stake to Vingirai.

 

But, the National Social Security Authority (NSSA), which was a major shareholder in the group then with 37.8% stake, resisted the allocation of further shares to THL, which had 21.44% shareholding, resulting in Vingirai approaching the Supreme Court.

 

However, NSSA, which also forced the removal of three THL nominees to ZB board — Mike Mahachi, Mike Manyika and Zororo Muranda, including the return of Vingirai as a non-executive director, has since offloaded its stake in ZB.

NSSA’s majority stake in ZB was snapped by a mysterious buyer.

 

With the wrangle over, Chiromo said capital preservation has emerged as a focal point for ZBFHL in its bid to increase profitability in an environment characterised by high inflation.

 

“The operating environment remained beset with significant headwinds with the outbreak of Covid-19 pandemic taking centre stage, exacerbating an already fragile domestic economy,” Chiromo said.

 

She added: “The group will proceed with cautious optimism in the short to medium-term. It remains imperative for the group to continuously seek ways to preserve its capital from value erosion occasioned by inflation.”

 

The group, Chiromo said, would also place increased importance on the need to build digital capacities for customers in a sustainable way because of the new normal brought about by the Covid-19 pandemic.

 

Total income for the group declined 9% to ZWL$3.3bn in the 12 months to December 31, 2020 from ZW$3.7bn in 2019 , underpinned by an 87% decrease in fair value adjustments, to ZWL$0.136bn from ZWL$1bn in 2019.

 

Interest income rose to ZWL$378m from ZWL$318m in 2019.

Income from commissions also fell in real terms by 8% to ZWL$1.14bn from ZW$1bn in 2019, as inflation continued to outpace rate adjustments for commissions and fees.

“The subdued revenue performance in 2020 was mainly due to the combined effects of low-cost absorption as performance of most economic sectors receded.

 

This was compounded by the freeze on banking fees by the authorities which was necessary to ameliorate the effects of Covid-19 on industry and the general public,” acting group CEO, Fanuel Kapanje said.

 

Operating costs shot 25% to ZWL$2.8bn from ZWL$2.2bn in 2019.

Return on equity was down to 15% from 58% in 2019 while liquidity ratio went down to 79% from 88%.

Cost to income ratio rose to 84% from 61% in 2019. Profit for the group plunged 45% in the

period under review to ZWL$1.1bn from ZWL$1.9bn reported in the previous year.

 

Total assets for the group stood at ZWL$19bn, reflecting a 21% increase from ZWL$15.6bn in the prior comparative period.

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