NMBZ mulls four new units in expansion drive

NMBZ Holdings is mulling adding four units to the group as part of its expansion drive to cater for the growing needs of customers.

James Mushore, the NMBZ group CEO said the institution would set up a fund management company, advisory services unit, a leasing company and a stock-broking firm.

A fund management company could be rolled out first as the group already has a dormant company, NMB Fund Management.

The expanded group would find roles for its two former executives, Otto Chekeche and Francis Zimuto who left the group at the height of foreign currency externalisation claims whicah were later quashed.

“They will not be coming to the bank but I hope to find them roles within the group as we grow because they have tremendous skills to contribute,” Mushore said.

He said the approval of a capital raising initiative by shareholders on Thursday would give the group a bigger capital base to lure international partners.

At an Annual General Meeting NMBZ’s shareholders approved a US$10,3 million rights issue to shore up the capital base of its flagship arm, NMB Bank and upgrade its information technology infrastructure.

African Century will underwrite the rights offer and will nominate two directors — Jonathan Chenevix-Trench and James de la Fargue — to sit on the NMBZ board.

The money raised would take the group’s capital base to over US$18 million.

In the financial year ended December 31 2009, NMBZ total shareholders funds were sitting at US$8 363 889.

“Having a bigger capital base makes us more attractive to foreign banks for us to be able to raise lines of credit.

“At the end of the day if we can raise lines of credit —some significant ones — we can then bring down cost of borrowings which is good for everybody, good for our economy, good for companies and good for us,” Mushore said.

Borrowing rates are elevated at the moment and they average 35% for 90 days, whilst for 60 days and 30 days rates average 30% and 25% respectively.

Lending rates for the 7-14 day area are being indicated within the 10% to 15% range.

The prevailing lending rates are punitive by any standards and analysts say they are an indication of structural rigidities that are still deep-seated in the economy.

Mushore said if the group were to attract long-term money, they would lend it to clients to retool their operations.

Local financial institutions are offering money on a short-term basis leading companies to seek offshore funding to revive operations.

“There is no long term money,” he said. “If we are able to attract lines of credit with long-term money we can now kick-start the leasing process because everyone needs to retool, manufacturing needs to retool, farming needs to retool but they can’t afford to retool when they are getting 30-day money.

“So part of this process when we start the leasing programme is being able to lend out money for longer periods,” he said.

The entry of African Century will open the doors to international capital as its nominated directors have reputable profiles, Mushore said.

“They come with a very good pedigree. Jonathan Chenevix-Trench, for example is ex-Morgan Stanley which is one of the big banks in the world, he has 25 years banking experience,” he said.

“What they will bring to the table is the ability to open doors for us in Europe as we now search for more lines of credit, quite aside from being able to assist in formulating strategies given his vast experience.

“James de la Fargue is a former banker and again we look to them to be able to assist us in moving forward”.