FIRST National Bank (FNB) will not fight Zambia’s decision to reverse its planned purchase of Finance Bank of Zambia preventing a potentially bruising and politically damaging legal battle in the copper-rich country.
The bank announced its widely expected decision on Friday, after being officially notified by the Zambian central bank that the cancellation of the sale was irreversible.
FNB CEO Michael Jordaan said the bank had accepted the inevitable and would engage with the authorities to cancel the deal worth $5.4m. The central bank also asked FNB to withdraw staff it had seconded to help manage the bank after it was placed under administration for alleged breaches of banking regulations.
The announcement by Mr Jordaan marks the end of a dramatic week for FNB’s parent, FirstRand , which was taken by surprise by President Michael Sata after his decision to reverse the deal.
Aware of its weakened political position and its long-term plans to be a major investor in Zambia, FirstRand had refrained from publicly attacking Mr Sata who had ordered the central bank to nullify the deal. It said it wanted official notification before commenting in detail.
Had FNB paid for the bank, it would have made FNB Zambia the fifth largest retail bank by assets, adding up to 50 branches to its existing five. In a statement, Mr Jordaan said FNB had now been officially notified by the Zambian central bank that it would not proceed with the planned sale.
“(The Zambian central bank has) indicated they wish to enter into a process with FNB to terminate the existing legal agreement relating to the proposed transaction,” Mr Jordaan said. “FNB has agreed to this request, and provided the process is within Zambian law, we will continue to engage with (the central bank).”
Mr Jordaan said FNB remained committed to Zambia.