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Dilute stake in MSB, Govt told

Bonongwe: MSB's business model needs to be reviewed
Bonongwe: MSB’s business model needs to be reviewed

The Malawi Government needs to consider diluting its share ownership in the Malawi Savings Bank (MSB) by inviting new investors to inject capital into the bank, chief executive officer Ian Bonongwe has suggested.

Currently, the government wholly-owns the financial institution and, two years ago, it indicated that it wanted the bank to go public by listing on the 14-counter Malawi Stock Exchange (MSE).

The bank’s board already nodded to the decision to have it listed on the local bourse, a development that would ensure that it brings confidence to its shareholders, raises the much-needed capital and its profile.

However, what is critical is how much stake Capital Hill will have to let go for it to go public.

Bonongwe told the latest Malawi Banker, a business consumer magazine for banks and financial institutions, that there is need to “seriously review the sustainability of MSB’s business model particularly from the view point of diversifying its share ownership structure.

“As you know, MSB is currently 100 percent owned by the Malawi Government, and looking at the future where banking is going and the need for compliance on capital adequacy ratios, particularly under Basel II protocol, it would be timely for the Malawi Government to consider diluting its share ownership structure while inviting new investment partners into the bank,” he explained.

He noted this could provide an opportunity for the bank to further leverage on technology and capital resources to fast-track the process of being the bank of choice.

When a company wants to raise funds for further expansion or setting up a new business venture, it has to either take a loan or issue shares through the stock market, which is, in fact, the primary source of a company to raise funds for business expansions.

For a company which is expected to go public for the first time, there is need to start with the Initial Public Offering (IPO)—the first sale of stock by a company to the public.

Ministry of Finance spokesperson Nations Msowoya could not be reached for a comment yesterday to say when government intends to dilute its shareholding in the bank.

But  MSE head of operations John Kamanga told Business News yesterday they are still awaiting communication from the bank on when they can list.

“We are still looking forward to the bank listing on the stock market. It is beneficial to the bank and its shareholders because it is an opportunity for investment,” he said, adding that the bank has a wider rural reach network which investors would like.

Kamanga said in the past few years, there has not been any listing on the local shares market largely because most of the companies were affected by the global financial crisis of 2008.

MSB’s performance, for the past few years has been satisfactory, serve for the huge bad debts the company wrote off in the year ended December 2012.

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