Finance Bank’s continued profitability exposes the MMD’s selfish motives and madness for wanting to sell a Bank so profitable for peanuts, says Finance Minister Alexander Chikwanda.
Finance Bank has paid income tax of K19.8 billion to the treasury, only K5 billion short of the amount the Bank was sold for to South Africa’s First Rand Bank by former President Rupiah Banda’s Government.
Meanwhile, audited results for the last three financial years have revealed that Finance Bank is solvent, contrary to the previous Government’s claims of mismanagement and non-compliance of the Banking and Financial Services Act.
Commenting on the findings in an interview, Chikwanda said the credibility of the Government’s action to resolve Finance Bank Zambia Limited has been redeemed.
Finance Bank was sold for K25 billion to First Rand’s subsidiary, First National Bank Zambia, whose top officers were appointed to run the bank after it was forcibly taken over by the Bank of Zambia last December.
According to the audited accounts by PwC, formerly PricewaterhouseCoopers, in 2010, the Bank made a net profit of K8.6 billion after recording a loss of K23.6 billion in 2009. In 2011 net pre-tax profit grew to K54.8 billion while income tax paid during the year under review was K19.8 billion compared to K7.9 incurred in 2010. The Bank’s operating expenses stood atK129.8 billion in 2011 compared to K158.7 seen in 2010. Customer deposits also saw an increment slightly over K1 trillion from K737.8 billion received in 2010. Its total assets stood at K1.3 trillion compared to K1.2 trillion in 2010 while its liabilities were recorded at K1.1 trillion for both years.
“Their profitability just reveals that people had ill-conceived motives,” Chikwanda said.
“It had nothing to do with the performance of the Bank [and] that is why we restored the ownership to the previous owners.”
He said the motives for the draconian decision by the MMD to sell the bank which had proved to be profitable was not in any way notable.
“That kind of performance redeems us and the credibility of our action in restoring the Bank because the reasons that were used for the draconian measures by the previous administration cannot be justified when the fact that the bank has made such huge tax contribution more than what they wanted to sell it for,” Chikwanda said.
“It was madness and it just shows the ill motives for wanting to sell a Bank so profitable for peanuts because the assets of the Bank far exceeded the consideration price…..the motives for that draconian decision did not seem to have been noble.”
He said both the previous Government and the Central Bank then acted in ways that were totally unethical and defied morality.
And Chikwanda has congratulated the FBZ management on the performance of the Bank.
“The future of the Bank is now in the hands of the owners but we wish them well and I congratulate Finance Bank for their splendid performance and effort,” said Chikwanda.
Finance Bank was seized by the BoZ last year for allegedly breaching financial laws and was then managed by First Rand. It has about 1,000 employees and 60 branches. FNB already operates in Zambia and has a presence in six other African countries, excluding South Africa and Zambia.