Reserve Bank of Malawi, CFTC to vet Indebank sale

The Reserve Bank of Malawi (RBM) and the Competition and Fair Trading Commission (CFTC) say they will vet National Bank of Malawi’s (NBM) intent to buy stakes in Indebank before a nod is given on the move.

Focus is on ensuring that the bank’s recapitalisation would not in any way stifle competition within the banking sector.

Ironically, according to set guidelines, NBM is expected take up a shareholding level of between 51 and 57 percent, meaning Indebank will still operate as a separate entity. This is in sharp contrast with best competition and fair trading practices.

RBM spoke spe r son Mbane Ngwira said in an interview yesterday that it was too early to determine NBM’s fate on the move as the regulator would have to consider input from CFTC on whether the move would not have an impact on competition.

“There are a number of other steps to be followed before the NBM acquires stakes in Indebank. National Bank will have to apply to the regulator and there will be need to go through CFCT. Focus is ensuring that whenever one company is acquiring another, it should not stifle competition,” said Ngwira.

Responding to a questionnaire, CFTC Consumer Welfare and Education Director Lewis Kulisewa said the commission is yet to get an official communication on the process after which an intent review will be conducted.

In accordance with Section 36 of the Competition and Fair Trading Act, CFTC will be required to carry out an assessment of the impact of the acquisition on competition in the financial market and related markets in Malawi.

According to Kulisewa, in the mean time, CFTC would not competently make a stand as the commission does not have concrete information concerning the transaction in terms of how the acquisition will be effected and how the merged entity will look like.

“It has only after the CFTC is availed sufficient information about the transaction by the parties that we would be in a position to give an informed view about the implication of the acquisition on competition,” said Kulisewa.

But Chancellor College economics professor Ben Kalua recently indicated that the acquisition of government stakes in Indebank and Malawi Savings Bank by already existing banks would stifled competition in the banking sector as it would mean that the bought banks would have to be absorbed by the buyers, thereby, reducing the number of players in the industry.

NBM was last week recommended as a preferred bidder in the recapitalization process of Indebank.

The bank has been opted as a preferred conforming bidder with an offer of K 6.3 billion beating a consortium of Prudential Holdings Limited and Rinascimento of Mauritius and the First Merchant Bank (FMB) which offered K 4.3 billion and K 6.05 billion respectively.

In Indebank, the state has 43.38 percent, Admarc Investment Holdings holds 25.67 percent, and Press Trust has 30 percent whereas employees hold 2.9 percent.