ECONET Wireless Zimbabwe has pledged to inject additional capital into TN Bank to reach US$50 million by June 2013 to meet the second phase of the Reserve Bank of Zimbabwe (RBZ) minimum capital requirements deadline.
Report by Ndamu Sandu
The bank has already complied with the first phase where it is supposed to have a minimum equity capital of US$25 million by December 31.
Insiders said last week the mobile operator assured the bank’s management it would chip in with the required capital.
After June 30, the bank would look for other opportunities to reach the US$100 million in one year.
Sources said the various options lined up included capital raising and tie-ups with local or international banks.
The injection of capital by Econet would result in the mobile operator shoring up its shareholding in the bank and diluting other shareholders in the process.
The other shareholders of the bank are prepared to be diluted as it would build a strong institution resulting in them having “a slice of the bigger cake”, close sources say.
- Chamisa under fire over US$120K donation
- Mavhunga puts DeMbare into Chibuku quarterfinals
- Pension funds bet on Cabora Bassa oilfields
- Councils defy govt fire tender directive
Keep Reading
Shareholders referred all questions to TN Bank whose chief executive officer George Nyashanu was unavailable for comment last week. Econet bought 45% shareholding in the bank for US$20 million to use it as a vehicle to promote its mobile money transfer business, EcoCash.
When the bank demerged from TN Holdings, founder Tawanda Nyambirai said the coming on board of a strong investor like Econet would strengthen the balance sheet of TN Bank.
He said TN Bank would be among the top five banks in the medium term. Econet needs a bank to grow its money transfer service and generate more revenue for the mobile operator.
EcoCash has been on a phenomenal rise and since inception last year, US$300 million had passed through the service.
Announcing Econet’s financial results for the half year ended August 31 2012, Econet chief executive officer Douglas Mboweni said the mobile operator had taken a strategic decision to invest in TN Bank to help grow the EcoCash subscriber base.
He said 50% of EcoCash subscribers came through the bank.
“To drive the initiative without interference, you have to take a strategic position, a position where you influence decision- making. By taking this significant stake, we are saying we are serious about EcoCash,” Mboweni said last month.
Mboweni said in the outlook, Econet would create “strong partnerships with the rest of the banking sector so that we have transactions flowing among the banks and also flowing between the EcoCash and the banking system”.
