Nedcor calls off Zim bank merger talks

HARARE – South African banking group Nedcor has called off talks about a possible merger with Zimbabwe’s troubled Trust Bank, Zimbabwe’s state-owned Herald newspaper reported yesterday.

The paper said the both Trust and the Reserve Bank of Zimbabwe had confirmed that the deal was over. Nedcor announced in April that it had entered formal talks with Trust Bank regarding a possible merger.At the time, Nedcor said its unit Nedbank Ltd and the Zimbabwe unit of its majority owner insurer Old Mutual had signed a memorandum of understanding about the possible merger.The link-up would have joined Trust Bank with Merchant Bank of Central Africa, which is indirectly majority-owned by Nedbank and Old Mutual Zimbabwe.There was no immediate comment from either Nedcor or Old Mutual.The Herald said Trust Bank’s lending book, with more than 70 per cent of total exposures being either expired, unauthorised or excesses over limits, was the stumbling block.The paper said a due diligence exercise had revealed that Trust Bank was technically insolvent with a negative shareholders’ equity of 151 billion Zimbabwe dollars.Trust Bank has received about US$645 billion from the RBZ’s Troubled Banks Fund, the Herald said.A crisis hit the banking sector in Zimbabwe last December, leading to the collapse of some black controlled banks.Zimbabwe’s central bank has indicated the need for consolidation in the sector.- Nampa-ReutersNedcor announced in April that it had entered formal talks with Trust Bank regarding a possible merger.At the time, Nedcor said its unit Nedbank Ltd and the Zimbabwe unit of its majority owner insurer Old Mutual had signed a memorandum of understanding about the possible merger.The link-up would have joined Trust Bank with Merchant Bank of Central Africa, which is indirectly majority-owned by Nedbank and Old Mutual Zimbabwe.There was no immediate comment from either Nedcor or Old Mutual.The Herald said Trust Bank’s lending book, with more than 70 per cent of total exposures being either expired, unauthorised or excesses over limits, was the stumbling block.The paper said a due diligence exercise had revealed that Trust Bank was technically insolvent with a negative shareholders’ equity of 151 billion Zimbabwe dollars.Trust Bank has received about US$645 billion from the RBZ’s Troubled Banks Fund, the Herald said.A crisis hit the banking sector in Zimbabwe last December, leading to the collapse of some black controlled banks.Zimbabwe’s central bank has indicated the need for consolidation in the sector.- Nampa-Reuters