FMB Capital Holdings (FMBCH) plc has unveiled plans to establish a new bank in Mauritius, attracting mixed reactions from investors and business experts.
The Malawi Stock Exchange (MSE)-listed group, which has five banks in the Southern African Development Community (Sadc) trading as First Capital Bank in Malawi, Zambia, Zimbabwe, Mozambique and Botswana, announced the plans in a cautionary statement.
FMBCH, which is incorporated in Mauritius, said the Bank of Mauritius has conveyed its in-principle approval to establish a bank in that country in a joint venture with Rodgers Global Financial Holdings Limited (RGFHL), a Mauritius-based listed international services and investment company.
Reads the cautionary statement: “The proposed bank will be established as a 50-50 joint venture between FMB Capital Holdings and RGFHL.
“The proposed bank will combine FMBCH’s regional banking expertise developed through its First Capital Bank operations across five Southern African Development Community markets.”
FMBCH said the proposed bank will be well positioned to serve the growing trade, investment and financial flows in Africa.
Stock market analyst and investor Brian Kampanje said in an interview that through the joint venture arrangement, FMBCH can penetrate the Mauritius market and tap vast business opportunities there, but added that shareholders need more information about the deal.
“The start-up for the joint venture won’t be significant to adversely affect the group’s capital structure, but can yield significant benefits from the synergies gained from the joint ventures,” he said.
Kampanje said shareholders expect more information regarding the estimated payback period of the investment for dividend decisions.
Business and taxation expert Moffat Ngalande said proper oversight of multinationals could give that Malawi more benefits.
He said the structure of FMBCH plc allows the group to operate more efficiently across borders, particularly given Mauritius’ favourable tax regime, strong legal framework and extensive agreements to avoid double taxation.
Ngalande, a former Institute of Chartered Accountants in Malawi president, said: “However, this structure raises important considerations for Malawi.
“While the country continues to benefit from taxation of the local banking subsidiary and related economic activity, the centralisation of capital and profits could limit the extent to which dividends and foreign currency earnings flow directly back into Malawi.”
Minority Shareholders Association of Listed Companies secretary general Frank Harawa, in an interview, encouraged FMBCH to also list on Stock Exchange of Mauritius to enable local shareholders tap on that market as well.
Stock market investor Purity Chitalo said FMBCH’s move strengthens its position as a regional banking powerhouse.
FMBCH plc is a Mauritius-based holding company and is licensed by the Mauritius Financial Services Commission as a global business company.
