Bank of Namibia, Governor Iipumbu Shiimi, has advised foreign owned commercial banks to float shares on the Namibian Stock Exchange (NSX) in order to meet local empowerment requirements.
Only NSX-listed FNB Namibia and Letshego Namibia out of the five foreign-owned banks in Namibia, have fully complied with the local shareholding requirement, while Standard Bank Namibia has transferred 10 percent equity to locals following a N$300 million empowerment deal announced in 2015, which opened up the opportunity for the lender’s employees obtain an eight percent stake, with the remaining two percent going to a community trust.
In addition to empowering Namibians through listing on the NSX, Letshego has a local partner, Kumwe Investments, which owns a 12 percent stake.
Last year, the Windhoek Observer reported that the Bank of Namibia has given foreign-owned banks until the end of 2019 to comply with requirements that locals should hold at least 25 percent equity in commercial lenders operating in the country.
NedBank, Standard Bank and Bank BIC Namibia Limited are either not compliant or partially compliant with the local shareholding requirement as stipulated by the Namibian Financial Sector Charter developed and endorsed by the financial sector industry, and the Namibia Financial Sector Strategy.
This comes as Shiimi said the Banking Institutions Amendment Bill, which seeks to limit foreign participation in a banking institution or microfinance banking institution to 55 percent, will be sent to the minister of finance for consideration in the coming weeks.
According to the draft Bill, no foreign national can acquire more than 55 percent of the vote bearing shares in a banking institution or microfinance banking institution without the prior written approval of the apex bank.
“We have negotiated with them and all of them are positive (about having local shareholding). They definitely want to reduce their foreign shareholding. We expect banks to have local shareholding,” Shiimi said in an interview with the Windhoek Observer this week.
He, however, noted that listing was not the only empowerment avenue available to banks.
“It can be a combination of things, but we want them to list as well. They can list or get other Namibian shareholders, so they can do both. But listing is appealing. It is going to expand the number of companies that are listed on the stock exchange. Therefore you will have more outlets for Namibian savings. Our interest is in more money being invested in the country and not outside.”
According to Shiimi, listing would lead to more Namibians being empowered.
“Imagine a cleaner in the Bank of Namibia having a stake because the pension fund has invested in a particular bank, that is broad based empowerment.”
Shimmi added that he is hopeful that Standard Bank and Nedbank, which remains 100 percent owned by its South African parent Nedbank South Africa, will list soon.
“I have confidence that they are getting there. Watch the space next year. The commitment is there, so it’s a question of time.”
Commenting on Bank BIC originally from Angola, the governor said the bank was still small and needs to be given time to expand before it can be expected to have local shareholding.
“Any business in a competitive industry will find it difficult to grow fast in a short space of time. The growth cannot be created artificially, but has to be organic. Many institutions want to spend the money before making the money. You first want to create a customer base, doing it without an income can be dangerous. In banking you also need to gain confidence. It takes time to create confidence,” Shiimi said.