HARARE - Togo-based Ecobank International (Ecobank) — owners of Ecobank Zimbabwe Limited (EZL) — plans to embark on a capital raising exercise and could also be considering mergers and acquisitions in the financial sector.
This comes as EZL recently increased its branch network in Zimbabwe to 13 as part of efforts to expand its footprint in the country.
The banking group will, at an extraordinary general meeting to be held next month, seek shareholders’ approval to adopt “a new resolution on capital raising” and amend its Articles of Association to include “provision of mergers, acquisitions and disposals” among other recommendations.
Daniel Sacky, EZL managing director, yesterday told businessdaily that while the capital raising initiatives were more to do with the group, the local unit is well on course to meet the central bank’s minimum capital requirement of $100 million following extension of the deadline.
The Reserve Bank of Zimbabwe recently extended the banks’ recapitalisation deadline from June this year to December 2020.
Meanwhile, Ecobank’s former chief executive Arnold Ekpe, prior to his departure early last year, noted that the organisation was using a flexible strategy that has seen the group successfully carrying out 14 acquisitions over the last five years.
His successor, Thierry Tanoh, on his inaugural visit to Zimbabwe last year said the group’s local operation would increase its market share by grabbing every “tremendous opportunity that comes along.”
“Anyone who is in our business will tell you that if a tremendous opportunity passes by, someone should look into it. It would be a mistake not to look into it but right now we are focusing on organic growth,” said Tanor.
Since entering Zimbabwe, Ecobank International — with operations in 32 countries, has invested over $43 million.
Following EZL’s establishment of a 13th branch — from only three, Sackey said “the opening of these additional branches is a testimony of our commitment in Zimbabwe.”
“This will be buttressed with the launch of new technologically driven banking solutions that will include a robust mobile wallet, a pan African card and acceptance of Visa, MasterCard and China Union Pay cards to offer enhanced convenience, accessibility and affordability to customers in and outside Africa,” he said.
Ecobank commenced operations in Zimbabwe in 2011 following the acquisition of a 70 percent stake in formerly Premier Finance Group.
Meanwhile, EZL’s profit before tax surged 2 300 percent to $1,2 million in the half year to June 2013, largely driven by growth in interest income.
During the period, interest grew 116 percent to $4,6 million while non-interest income increased by 38 percent to $4,3 million, pushing the bank’s net revenues up 58 percent to $7,9 million.
The group said increased interest income resulted from a bigger customer base, lower cost of funds and $50 million lines of credit support.