FMB Botswana capital up 100% - 30/May/08

FIRST Merchant Bank (FMB) has doubled its investment in Capital Bank from 20 million Pula (around K400 million) to 40 million Pula (about K800 million).

Chairman for Capital Bank Hiteshi Anadkat said this on Wednesday, a day after the launch of the new bank, when he addressed senior officials from the Bank of Botswana and business representatives in Gaborone.

Anadkat said FMB would double up the investment in Capital Bank to boost the setting up of new branches in remote areas of Botswana within three years. "We want to ensure that this being Malawi's first banking venture outside the country it becomes successful  for others to emulate. Therefore the shareholders have agreed to double up the investment." Anadkat said.

The launch of First Merchant Bank (FMB) subsidiary on Tuesday met with an increase of interest rates by the Bank of Botswana.

The country's central bank announced Tuesday morning that it has hiked the bank rate by a 50 basis point from 14.50 percent to 15 percent which gives room for the new bank to grow.

The bank indicated that at its meeting on Monday the Monetary Policy Committee (MFC) increased the bank rate as a reflection of the central bank's proactive stance of tightening monetary policy in order to sustain a low medium-term inflation path.

Botswana's inflation rate for March climbed to 9.8 percent up from 9 percent registered in February.

"While recent increase in inflation has mainly been associated with global increases in the prices of food and oil, the risks to the inflation outlook are predominantly upward, and the policy tightening will help contain second-round effects and inflationary expectations.

The bank remains committed to responding appropriately to all economic and financial developments to keep inflation under control," reads part of the minutes from the central bank meeting.

In his official address during the launch Assistant Minister of Finance and Development Samson Moyo Guma said Capital Bank becomes the first commercial bank to have local shareholders.

"FMB has 51 percent shares in this bank while locals have the other 41 which makes it the first bank to be partially owned by Botswanas," said Guma. Capital Bank Chairman, Anadkat said their target market would be the Small and Medium Enterprises (SME) sector which has not been receiving adequate attention in the country.

"We are fully aware that we cannot immediately serve all the needs of the very large corporate in this country but we will ably serve some of their needs and develop the infrastructure to target the low retail sector," said Anadkat.

Capital Bank is expected to have an employment base of 36 people of which 30 would be local citizens.

In her remarks Bank of Botswana Governor Lina Mohohlo challenged Capital Bank to provide easily accessed and affordable banking services to the people who live in rural areas.

"Banking is no longer a luxury but a necessity and the challenge for Batswanas is that they do not have affordable banking services," said Mohohlo.

The Bank of Botswana and Reserve Bank of Malawi have been working together to facilitate the establishment of Capital Bank, which is owned by FMB (51 percent) and local citizens (49 percent).

By Henry Mchazime, The Daily Times Newspaper

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