US$2.5 billion bank merger collapses in Zimbabwe due to regulatory hurdles – Nehanda Radio

HARARE – A proposed merger between CBZ Holdings Limited (CBZHL) and ZB Financial Holdings Limited (ZBFHL), valued at US$2.5 billion, has collapsed due to regulatory hurdles.

The merger aimed to create Zimbabwe’s largest financial institution, with assets exceeding US$2.5 billion. However, the Competition and Tariff Commission (CTC) imposed stringent conditions precedent, which CBZHL deemed unfeasible.

In a statement to shareholders, CBZHL announced that it would no longer proceed with the acquisition, citing the onerous conditions set by the CTC.

“The CTC set various conditions for approval of the transaction and having considered the nature of the conditions, the Directors have decided that the Company will no longer proceed with the transaction.

“Accordingly, Shareholders and the investing public are hereby advised that the Company will no longer be proceeding with the acquisition of a complimentary business as previously announced.

“No further announcements will be made in respect of this issue,” Rumbidzayi Angeline Jakanani, the Group’s Chief Governance Officer, stated.

CBZ Holdings, whose full name is CBZ Holdings Limited, is a financial services conglomerate in Zimbabwe. It owns subsidiaries in banking, insurance, investments, wealth management, mortgages and retail finance. (Picture via Facebook – CBZ Holdings)

CBZHL board chairman Luckson Zembe, recently, expressed frustration over the CTC’s tough stance, emphasising the strategic importance of creating a robust financial institution capable of driving Zimbabwe’s economic ambitions.

“The main reason for these transactions is to try and create institutions that we can anchor our national strategy on,” Zembe told Business Times.

“We need to have institutions that have the capacity and capability to be able to support national strategy, to support business strategy.”

Zembe criticised decision-makers in the public sector for perceiving the merger from a political perspective rather than an economic one.

“They tend to perceive things to a large extent from a political perspective rather than from an economic perspective,” he said.

CBZHL had anticipated the creation of a financial giant capable of competing with regional and international players.

“When you talk about mobilising resources for the economy, if you look at this economy, Zimbabwe economy, for it to be really turned around and performing and achieving the aspirations that we have of an upper middle income economy, we need to be able to mobilise not less than US$20bn annually to be injected into this economy,” Zembe added.

“But there is no bank, even all of them, all our banks put together. They have challenges because they are too small to be able to go out into the market, especially international markets, to mobilise lines of credit and to be able to mobilise the resources that can support this economy.”

The merged entity was expected to have assets exceeding US$2.5 billion, positioning it as the most aggressive player by asset base, net present value, and market capitalisation in Zimbabwe.

Nixon Nyikadzino, a social and economic development commentator, has supported the decision made by the CTC, saying the merger would have stifled competition in the banking sector in Zimbabwe.

“I’m not surprised to see this deal collapse. A merger of this magnitude would have created a behemoth of a bank, stifling competition and potentially creating a monopoly in the Zimbabwean banking sector.

“This would have been disastrous for consumers and small businesses, who would have been at the mercy of a single, dominant player.

“The regulator’s decision (to impose stringent conditions) was likely a wise one, and I applaud their efforts to protect the interests of the broader economy.

“Let us hope that CBZ and ZB will now focus on competing with each other, driving innovation and better services for their customers,” Nyikadzino added.

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