Libya Foreign Bank in pillar position in the

CBZ Harare- Zimbabwe (PANA) -- When Pakistan's Bank of Credit and Commerce International (BCCI) collapsed in the 1990s, its subsidiary in Zimbabwe zoomed to the cliff, widely expected to similarly plunge.
But the government, anxious to avoid a systematic contagion in the local financial sector, quickly intervened and took over the subsidiary, and renamed it the Commercial Bank of Zimbabwe (CBZ).
However, the takeover was largely in name only, with very little cash injection to stabilise the troubled bank, at the time ranked Zimbabwe's smallest commercial bank with fewer than ten branches countrywide.
The government quickly called in other investors to come on board, in addition to changing the bank's management, to stabilise CBZ and ensure its troubles did not spread to the entire financial sector.
Among the biggest investors to respond was the Libyan Foreign Bank, which took a 14 percent stake in the bank, becoming the second largest shareholder.
The investment, running into millions of United States dollars, was not only Libya's flagship investment in Zimbabwe, but helped stabilise CBZ and laid the foundation for its recovery and rapid growth that have followed since.
Under the astute leadership of Gideon Gono, now Zimbabwe's central bank governor, and solid shareholders such as the Libyan Foreign Bank, CBZ spectacularly rose from the ashes to dominate the country's banking sector.
It is now the country's biggest bank, in terms of assets and capitalisation, outpacing rivals such as Barclays Bank and Standard Chartered Bank of the United Kingdom which have operated in Zimbabwe for more than one hundred years.
On its way to the summit of the country's banking sector, it depended heavily on core shareholders for support in the early stages of its re-birth.
Among its main backers was the Libya Arab Foreign Bank, which invested more, resulting in the north African lender steadily increasing its stake from the initial 12.
4 percent to the current 14 percent.
''The Libya Arab Foreign Bank has been our pillar shareholder, and we value its support very much,'' Nyasha Makuvise, CBZ Holdings chief executive, said.
As a growth strategy, the bank borrowed heavily, guaranteed by its new shareholders, to expand its branch network and loan portfolio.
The latter strategy attracted huge numbers of new clients, particularly individuals and small businesses which bigger banks looked down upon.
It was a strategy that was to prove handy a few years down the road when an economic crisis gripped Zimbabwe from 2,000, decimating formal business which was the bedrock of CBZ's then bigger competitors.
Backed up by the Libya Arab Foreign Bank and other new powerful shareholders, the bank later went on an acquisition spree of its weaker competitors in the 2,000s, in the words of Makuvise, ''to grow further and ensure a good return to shareholders.
'' It now provides all banking and financial services, from insurance, mortgage finance to asset management and private banking.
The bank's ties with the Libya Arab Foreign Bank also opened other lucrative doors to CBZ, among them handling trade finance between the two countries, crucially a US$360 million fuel credit facility that Tripoli offered Zimbabwe a few years ago.
The bank, thanks to the Libya Arab Foreign Bank, still handles much of Libyan trade and investment in Zimbabwe, which is concentrated in the energy, tourism and agriculture sectors.
CBZ became so attractive that when it listed on the Zimbabwe Stock Exchange, it generated interest as far away as South Africa and other regional markets.
South Africa's biggest bank, ABSA, took a 25 percent shareholding to become the biggest shareholder in the bank.
But, the South African bank has since sold its shareholding after it become part of Barclays Bank, leaving the Libya Arab Foreign Bank in its pillar position in CBZ.

10 october 2010 12:28:00

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