Vingirai threatens ZB pull out

Published: 04 July 2017

Government is likely to regain its 23,5 percent stake in ZB Financial Holdings (ZBFH) after businessman Nicholas Vingirai threatened to pull out of the banking group due to shareholder disagreements.

Market experts, however, said the divorce could have serious negative implications on the listed financial services group which is on a recovery path after it was removed from America's sanctions list late last year.

Vingirai - through his Transnational Holdings Limited (THL) - was last year given 19,79 percent stake in ZBFH by the government with the option of increasing his shareholding by an additional six percent as compensation for the loss of Intermarket Holdings Limited (Intermarket) 13 years ago.

Vingirai lost his Intermarket group where THL was the major shareholder, at the height of the 2004 bank crisis when the Reserve Bank of Zimbabwe intervened to arrest a liquidity crunch by bailing out troubled banks and ejecting several owner-managers it accused of financial imprudence.

The central bank took over Intermarket before selling it off to ZBFH, then a rival banking group.

Vingirai, however, fought back and reclaimed his shareholding, but has had a tempestuous relationship with fellow shareholder the National Social Security Authority (Nssa) with 37,79 percent stake in ZBFH since his 2016 comeback, tangling over board appointments, a contentious dividend payment and his quest for a bigger stake.

In May this year, Nssa, together with other shareholders, blocked Vingirai from getting the additional six percent shareholding in the financial services group and also voted against the payment of the ZBFH dividend to an investment vehicle run by veteran banker.

To add salt to injury, Vingirai and his nominees were booted out of the ZBFH board, pushing the banker to opt out of the agreement he had with the government in 2016.

"The agreement was brokered by government and therefore we are engaging government. If that fails, the courts are always available but as you know it is always infinitely better to find each other," Vingirai said in an interview with the public media.

"But we are not going to ask the courts to enforce the botched agreement despite our view that ZBFH ratified the agreement. Our view is that the purported merger should be reversed because it offended the provisions of the Articles and Memos of IHL.

"In essence, ZBFH must hand back what it took illegally. An illegality cannot be cured, can it?" he said.

Market analysts said should Vingirai go ahead with his threats, government and Nssa will emerge as major shareholders in ZBFH, but this will significantly affect the asset base of the financial services group and confidentiality.

Information gathered by the businessdaily shows that IHL still has viable subsidiaries or investments such as ZB Reinsurance, ZB Buildings Society, ZB Life and Mashonaland Holdings.

This will leave ZBFH with only ZB Bank and ZB Capital and transfer secretaries among subsidiaries.
- dailynews