Why Nyambirai sold TN Bank

Why Nyambirai sold TN Bank
Published: 12 February 2014
The sale of TN Bank to Econet Wireless in February 2013 generated frenzied speculation. It was claimed then, that Tawanda Nyambirai, the CEO of Lifestyle Holdings had fallen out with Strive Masiyiwa, the founder of Econet Wireless.

In rare dialogue last week with The Zimbabwe Mail, Nyambirai opened up about the bank sale and commented briefly about his "crumbling business empire" and its future.

He said, if anything, the purchase of his bank by Econet was testament of his strong relationship with Masiyiwa.

"I was not the only shareholder of a bank that approached him. Many did. It was an honour that he saw TN Bank as fitting into his strategic goals and he chose to do the transaction with me," he said.

Nyambirai said he sold the bank after taking a cold, rationale review of the business climate and what was needed for the bank to survive.

"I realised very quickly that without a lender of last resort, there was no way, a commercial bank could survive without scale and deep, deep pockets.

"I did not have that and if the truth be told, neither do lots of people," he added.

Nyambirai said he personally wrote to ex-central bank governor Gideon Gono supporting his introduction of the $100 million bank capitalisation well before deciding to sell the bank.

In the letter, Nyambirai indicated that although the new capital levels meant he would loose the prestige of being the owner of a bank, there was no point in owning a bank that could not fulfil its core mandate of lending.

He argued it was not feasible to run a bank with a capital base of less than $50 million.

"If a bank is undercapitalised, it will be under extreme pressure. This is what is driving the interest rates, as small banks battle to attract deposits and at the same time, there are very few good quality companies left that can borrow money and service their obligations. This would be a vicious circle, which can lead to the collapse of the whole financial system," he said.

When asked to buy, Nyambirai said Masiyiwa was reluctant but realised that his dream to help millions of people to get access to banking would not be realised if foreign owned banks remained the only strong banks.

"He then directed his team to develop a comprehensive proposal for his consideration."

Nyambirai said the market capitalisation of TN Holdings Limited before the demerger of TN Bank Limited was $29 million and the bank was disposed at a value of $2,6 million.

He said if he had held onto TN Bank, his company would not have survived the financial turbulence - and the company's value would have been lost.

Currently, he is redefining the strategic focus of the remaining businesses, by disposing those that do not have synergy with what "I want to do" and through cost cutting exercises.

"I am making tough choices. Where I have conviction, I am not scared to make decisions even if many people may not agree with them. For the wrong decisions I make, I always take full responsibility and do my best to make good. For the correct decisions that I make such as the disposal of my interests in TN Bank, I always thank God in humility because I am a recipient of unmerited favour," he said.

On whether his business empire was crumbling, the lawyer cum businessman  said he wanted time and space to restructure Lifestyle after which he would talk. Lifestyle was doing what everybody else should be doing in the circumstances – right sizing, he said.

"We shall only keep those businesses where we are, or can be better than our competitors. Lifestyle shall not crumble," he declared.

One of Nyambirai's troubled subsidiaries; TN Harlequin is retrenching due to poor sales and a worsening economic climate.

"Yes, TN Harlequin is retrenching… Its manufacturing and retail arms employ in excess of 1 400 people. To carry this level of staff costs, the company has to generate sales in excess of $1,800,000, 00 per month. To survive, we must reduce our operating expenditures and align them to our sustainable revenue levels. That is why we are retrenching and closing those branches with high occupancy costs," he explained.

He was adamant TN Grill was not closing even though some branches have been closed.

"We shall not close TN Grill. We shall close some branches and open new ones at the same time.

"However, we shall open more new branches that we will close. Therefore, the story here is one of growth rather than crumbling," he said.
- zimmail
Tags: Nyambirai, TNBank,


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