HARARE, May 12 (The Source) – Nicholas Vingirai’s return to high finance suffered a dramatic setback on Friday when ZB Financial Holdings shareholders voted against his re-election to the board following a charged confrontation with institutional investor NSSA at Friday’s annual general meeting.
NSSA is ZB’s largest shareholder with a 37.79 percent stake, with Vingirai’s Transnational Holdings Limited (THL) being the second biggest, with 19.79 percent. The government, which previously held 23.5 percent, is now a 3.71 percent shareholder after agreeing to cede 19.79 percent to THL following a legal battle that led to a May 31 2016 agreement between the parties. Old Mutual has a 5.5 percent stake in ZB.
Vingirai lost his Intermarket Holdings Group 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 ZB, then a rival banking group.
Vingirai, however, fought back and reclaimed his shareholding, but has had a tempestuous relationship with fellow shareholder NSSA since his 2016 comeback, tangling over board appointments, a contentious dividend payment and his quest for a bigger stake.
At the heart of the raging shareholder feud is a $658,699 dividend paid by ZB to THL on January 23, 2017, and the latter’s claim of an additional 10.9 million ZB shares, or 6.21 of the financial group’s total issued shares.
NSSA, which has shirked its reputation as a supine investor since investment banker Robin Vela was appointed chairman in 2015, has protested against the dividend payment. The $1.3 billion statutory pension fund argues that the record date for the payment was June 17 2016 and THL was only registered as a ZB shareholder on February 6 2017.
Because the government was still on the ZB shareholder register on the record date, it had received a dividend payment from the financial group. The January 2017 dividend payment to THL was, in effect, a duplicate payment which prejudiced other shareholders, NSSA argues.
THL’s position is that it was entitled to the dividend payment as its share transfer deal with government took effect on May 31 2016.
Shareholders at the Friday meeting also heard that the board had requested a refund from government but was yet to get a response or admission of liability.
NSSA chief investment officer Herbert Hungwe, who brought with him a lawyer — prominent advocate Thabani Mpofu — to the AGM much to the chagrin of Vingirai, insisted THL should refund the dividend and claim funds from the government.
NSSA is backed by the RBZ in its push for the dividend repayment. The central bank has issued an order for a refund as well as the appointment of independent non-executive directors and the reconstitution of ZB’s board committees.
“Government should pay THL the amount of the dividend due to them since the two parties are the ones who had an agreement,” Hungwe told the AGM as temperatures rose at the tense meeting.
Vingirai, who warned of legal consequences if the dividend payment was reversed, vehemently disagreed.
“As far as THL is concerned, once the agreement was reached between the government and THL, the company began to implement that agreement even before THL became the shareholder in the sense of the shares being transferred,” Vingirai said.
The meeting also saw shareholders turn down a claim by THL for an additional 6,21 percent stake in ZB, which Vingirai’s outfit says it was eligible to get from an optional offer of ZB which was made to Intermarket Holdings’ minority shareholders at a time when THL then held 15,61 percent of issued share capital of Itntermarket in 2007.
The net effect of the issue of an additional 6,21 percent shares to THL would be a dilution of 5,8 percent of the existing ZBFH shareholders.
Away from the shareholder strife, ZB chief executive, Ron Mutandagayi revealed that the bank’s pre-profit increased by 195 percent in the four months to April, compared to the same period last year.
Net interest income was 66 percent above prior year due to earnings from treasury bills and loan recoveries.
“Loan recoveries from the Zimbabwe Asset Management Company Limited (ZAMCO) to 30 April 2017 totalled $2,3 million. This brings the group’s recoveries from ZAMCO since its inception to a total of $22,7 million,” said Mutandagayi.
Loans and advances were $92,9 million, a four percent drop from 31 December 2016. Total assets declined seven percent to $406,8 million from $439,3 million in December last year due to a 15 percent drop in deposits to $234,3 million from $275,3 million.
Cash resources dropped 31 percent to $56,9 million from $82,2 million. Operating expenses marginally declined to $16,19 million from $16,27 million in December last year.
Mutandagayi said the bank was re-engaging its foreign correspondent banking network and it has resuscitated its Euro, British pound, South African rand and United States dollar correspondent banking accounts.
ZB will soon roll out its diaspora business strategy, targeting markets in Australia, United Kingdom, Canada and United States.
The ZB group wholly owns ZB Bank Limited, ZB Reinsurance Limited, ZB Transfer Secretaries, ZB Capital and ZB Associated Services. It has a 75, 33 percent stake in ZB Building Society and 64 percent shareholding in ZB Life Assurance.