Taxpayers face a potentially massive financial burden as the defunct Finance Bank of Malawi (FBM) seeks K1.03 trillion in compensation and interest from the Reserve Bank of Malawi (RBM).
This follows a recent Malawi Supreme Court of Appeal (MSCA) ruling in favour of FBM.
The MSCA has scheduled a hearing for May 25, 2026, to formally assess the financial damages.
Attorney General Frank Mbeta confirmed in a WhatsApp response that his office is collaborating with the RBM to aggressively challenge the trillion-kwacha claim.
According to the official court notice: “Let all the parties concerned attend to the assistant registrar of the supreme court of appeal on the 25th day of May, 2026 at 9.30 [am] o’clock for assessment of damages herein.”
“Take further notice that the Witness Statements of Mkuzo Kenneth Kuwani and Sokwani Peter Chilembo together with the Skeleton Arguments filed herewith shall be used by the Appellant in support of the Assessment of Damages.
The assessment comes after the February 3 2026 MSCA ruling, which faulted RBM’ decision to revoke FBM’s licence over alleged malpractices, including claims that the bank opened ghost accounts used to externalise foreign currency.
In that ruling, the full bench of the MSCA also said RBM’s decision to revoke the licence was unlawful, further directing that the damages be assessed by the assistant registrar of the Supreme Court.
FBM legal claim
On April 17 2026, First Merchant Bank (FBM) submitted a formal damages assessment to the court. The submission was presented by Mkuzo Keneth Kuwani, Group Financial Adviser for the Mahtani Group of Companies. FBM seeks $551.9 million for lost business and profits, alongside K61.7 billion in accrued interest.
The comprehensive claim spans multiple legal and financial categories:
l Constitutional & public malfeasance: General damages for public office malfeasance.
lProperty rights: General damages for breaches of constitutional rights to property and economic activity.
l Contractual breaches: K27.8 million for wrongfully inducing FBM to breach employment contracts.
lInterest rates: Interest on liquidated sums calculated at prevailing commercial bank lending rates.
Valuation methodology
Kuwani applied two distinct financial frameworks to calculate the total losses:
lBase valuation: Initial loss of business and profits quantified at $134 073 645.00. This figure is designated in US dollars to reflect FBM’s status as a Foreign Direct Investment (FDI) in Malawi.
l Comparative valuation: Scaled to $551.9 million after applying market-comparative valuation methods.
lLiquidated claims: Total accumulated liquidated sums and interest finalised at K61 757 925 570.90.
State response
Judiciary spokesperson Ruth Mputeni confirmed receipt of the submission and the upcoming assessment schedule. Attorney General (AG) Mbeta announced that the government will aggressively contest the valuation.
The State legal team is currently collaborating with the Reserve Bank of Malawi (RBM) to formalise their counter-response and challenge FBM’s proposed figures.
National Anti-Corruption Alliance (NACA) chairperson Michael Kaiyatsa described the proposed figures as deeply concerning for Malawi’s fragile economy.
With citizens already grappling with rising prices, forex shortages, unemployment, and declining purchasing power, he warned the claim could further strain public finances.
“Malawians will understandably worry about the impact on government expenditure, public services, debt levels, and investor confidence,” Kaiyatsa said.
“It raises critical questions about accountability and financial governance. Authorities must handle this transparently, urgently, and keep the public informed.”
Private practice lawyer Benedicto Kondowe noted that while parties have a right to compensation for unlawful conduct, courts must balance this against fairness, proportionality, and public interest.
“The Attorney General and the Reserve Bank of Malawi (RBM) must ensure the court fully appreciates how this award could impact public resources, economic stability, inflation, and taxpayers,” Kondowe stated.
“The court must carefully examine if losses were strictly proven, if projected future profits are too speculative, and if interest calculations are legally sustainable.”
The case began in the High Court of Malawi’s Commercial Division in May 2005. RBM counterclaimed for loss of business following the closure.
In October 2014, the High Court awarded RBM K13 million and dismissed Finance Bank’s counterclaim.
Finance Bank opened in 1995. After its license was revoked in May 2005, it briefly reopened under central bank supervision before formally closing in January 2006.
