Finance Bank returns, wears‘new’ face

Finance Bank (Malawi) Limited, which the Reserve Bank of Malawi (RBM) closed in 2005 amid accusations of wrong-doing, is back under the name New Finance Bank (Malawi) Limited.

Despite the rebranding, the company has the same principal shareholder, a move that a banking expert has argued raises questions about the regulation of the banking sector in Malawi.

When revoking the licence, RBM accused the bank of engaging in malpractices such as failing to observe the know-your-customer principle and opening ghost accounts that were used to siphon foreign currency outside the country.

It is curious, said an expert, that while the old Finance Bank is still challenging the liquidation in the High Court, RBM went ahead to register the ‘new’ entity.

RBM spokesperson Mbane Ngwira confirmed that the central bank issued a licence to New Finance Bank (Malawi) Limited, arguing that it is separate from the liquidated financial institution.

Ngwira confirmed that one of the directors in the old bank is in the board of New Finance Bank.

Nation on Sunday has established that Dr Rajan Mahtan of Finance Bank of Zambia is the principal shareholder in the new firm.

Mahtan was also the principal shareholder in the liquidated bank.

“The bank that has been issued with a licence to operate is called New Finance Bank of Malawi. This bank would be regulated and supervised just like any other player in the financial industry by the Reserve Bank of Malawi,” said Ngwira.

But former RBM governor Victor Mbewe said although the central bank was guided by the law in issuing a licence to the new bank, any bank whose name resembles Finance Bank would create problems in the banking market.

“The name might cause some hiccups. Using the new name, the perception spill-over might not be good and would create doubt in the community. Reserve Bank must explain how the general public is protected. We are talking of integrity and previous track record.

“You could liken the coming in of Finance Bank to a football player who has been red-carded being brought back into the game before the game is over. It is almost like Reserve Bank has reinstated Finance Bank while the court is still hearing the case,” said Mbewe.

However, Pempho Likongwe, managing partner of Likongwe and Company, a law firm working on the establishment of the new bank, said the judgment in the case at the High Court will clarify whether the liquidated bank was in the wrong.

“The directors of the New Finance Bank Malawi will be in the country soon. Finance Bank is a very big bank in Zambia,” said Likongwe.