Finance bank sold to FirstRand of South Africa

Finance bank sold to FirstRand of South Africa

JOHANNESBURG (Reuters) – South Africa’s FirstRand has agreed to pay $5.4 million for Zambia’s Finance Bank, the central bank said on Monday, giving South Africa’s second-largest lender a big boost in the continent’s top copper producer.

The central bank seized Finance Bank from its shareholders in 2010 for for violating the law through unsound practices, including insider borrowing.

“Upon agreeing appropriate terms, (the Bank of Zambia) accepted the offer by FirstRand,” the central bank said in a statement.

FirstRand will operate all 34 branches and 16 agencies of Finance Bank, while the Bank of Zambia would continue to run its problematic assets, such as those which were currently under litigation, the central bank said.

Finance Bank has the largest rural network among Zambian commercial lenders.

The central bank said it accepted FirstRand’s offer because of its superior profile and track record in managing weak banking institutions.

FirstRand already has operations in seven African countries outside of South Africa, including Zambia.

The lender is scheduled to report its full-year earnings on Tuesday. Some analysts expect that it would be returning excess capital to shareholders after selling off a stake in an insurance unit for 3.75 billion rand earlier this year.

FirstRand shares are up 0.49 percent at 20.60 rand at 1426GMT.

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