Sunday, October 19, 2008

SwaziBank up for sale

By Alec Lushaba, Observer

Government wants to sell part of its shares at SwaziBank to a strategic partner.

Following the approval of the Privatisation Policy in 2005 government has been looking at ways in which it can privatise and corporatise some of its public enterprises.

In some instances, the privatisation of some of the public enterprises has been hindered by lack of a regulator, but with the financial institution, it is much easier as the Central Bank of Swaziland regulates the financial industry.

Finance Principal Secretary Dumsani Masilela revealed to the Weekend Observer that government, the Central Bank of Swaziland, SwaziBank and SUFIAW officials are engaged in talks exploring how they can structure the transaction in such a way that it takes into consideration the interests of the country.

“We are looking for partners that will buy some shares, which is called dilution of shares as opposed to the total sale of shares of the institution to private hands,” he said.

Masilela stated that at the moment they had not yet reached a stage where they were considering offers to buy the bank’s shares.

SwaziBank MD Stanley Matsebula who has engineered the turn-around of the bank from the abyss of losses to its current state where it is now amongst leading financial institutions.

Matsebula has turned the bank around from one that made losses of over E300 million to a more financial stable bank with a healthy balance showing excesses of E330 million.

When contacted on the issue of selling the bank, Matsebula said SwaziBank attracts a lot of interests from various quarters.

“There is currently so much interest to purchase the shares. After government had done the privatisation policy and roadmap, we were listed under the category of public enterprises which were ready for such.

“However, it is not for me or the bank to say sell. That is the prerogative of the shareholder. I know that there are lots of arguments about that issue, one being that why do you have to sell a family jewel,” Matsebula said.

He said his personal view on the matter is not that of selling outright, but favours a dilution of shares.

Matsebula said the dilution of shares has so many advantages, for instance, the bank has bought the state-of-the-art software which cost them E20m recently for managing their records of accounts.

“The challenge will come some few years down the line where we will be called again to invest in more modern software. By then you would find that the equipment cost five times more than the price we paid and you then wonder in our current form where would we get that money. It is then that the strategic partner who would have bought shares come in and pay those costs we would otherwise not afford.

“Further, the strategic partner’s coming in would address the issue of conflicting mandate that we have. We are a commercial bank on one hand and also expected to be a development bank. In the current state we are in, you cannot sustain both mandates for long. The development aspect is very costly and needs solid funding to sustain. The mobilisation of public savings is a short term objective from where we create long term assets. That puts us in a conflict position with the regulator,” Matsebula stated.

He said the other factor which currently works against the bank is the political interference perception either from government or powerful individuals.

“As a bank, once such perception are created, you suffer a lot, irrespective of whether such perception is real or perceived, that is for history to judge,” he said.

The MD said SwaziBank must survive long after he has left and its success should not be based on an individual. “The dilution of shares will bring sustainable systems to ensure that the bank continues to grow even after he has left the institution. The strategic partner must ensure good and leadership of the bank,” Matsebula stated.