Wholly State-owned commercial bank, Malawi Savings Bank (MSB), faces a March 31 2015 deadline to recapitalise or risk closure, Minister of Finance, Economic Planning and Development Goodall Gondwe said yesterday.
Briefing journalists in Lilongwe, Gondwe said Governor of the Reserve Bank of Malawi (RBM) Charles Chuka, who is the registrar and regulator of financial institutions, has given government the directive.
He said Chuka informed him that previously there have been three postponements to act on the delay by MSB “and he [Chuka] says this is the last time.”
Said Gondwe: “He [Chuka], as a registrar, wants the ratios to agree and these are Basel II requirements and the Liquidity Reserve Requirement [LRR].”
RBM spokesperson Mbane Ngwira yesterday said the central bank cannot comment on remarks made by the shareholder of MSB at this point.
Likewise, Public Private Partnership (PPP) Commission chief executive officer Jimmy Lipunga also opted not to comment on the matter and only said the commission would now open negotiations with the sole and preferred bidder, FDH Bank Limited.
Gondwe has since disclosed that FDH Bank Limited is offering K4.9 billion to invest in the struggling bank.
However, according to Gondwe, the offer represents 75 percent of all stakes held by government in the bank.
Said Gondwe: “But our accountants will look into the value and I am not prepared to discuss it now.”
Further, Gondwe said government is not selling MSB, but inviting a strategic investor whom he said will be managing the bank.
He said anywhere in the region, the business of government is not to manage banks.
“Government will retain the shares. We are not selling MSB; we are inviting a strategic partner to join us. The investor may take the majority shareholder or not depending on circumstances,” said Gondwe.
Quizzed on how government intends to handle the bad debts crippling MSB, Gondwe said: “All I am going to do is to take them away from the bank, put together and give them to the Ministry of Justice, they will handle it.”