ECONET has appointed a South African national to head TN Bank as the telecoms giant looks to turn its banking unit into one of the major hitters in the country’s financial services sector.
In a statement Tuesday, Econet said veteran South African banker, Kwanele Ngwenya, had replaced George Nyashanu as chief executive with latter re-assigned within the telecoms group.
Ngwenya was head of the Botswana operations of South African banking group First National Bank before joining TN Bank which was acquired by Econet in December.
Econet, the country’s biggest telecoms operator, says it wants to introduce a new model of banking in the local market and has charged Ngwenya with turning TN Bank into one of the Zimbabwe’s leading financial services institutions.
But Ngwenya faces an uphill task establishing TN Bank in a sector analysts say is already over-crowded with the Commercial Bank of Zimbabwe as the biggest player followed the foreign-backed Barclays, Stanchart and Stanbic banks.
Econet said it was making a number of sweeping changes at the bank with founding chairman Tawanda Nyambirai having left last month while a number of international bankers were also expected to come on board.
The company also said most of TN shareholders have accepted its takeover of the bank which will be used to promote the highly successful mobile money service EcoCash.
“An overwhelming majority of the TN Bank shareholders accepted the offer by the telecoms group to buy them out of TN Bank Limited,” Econet said.
“According to preliminary returns, 96% of the minority shareholders accepted the Econet offer; 99% of those shareholders who accepted the offer opted for shares rather than cash.”
Econet, which had a 45 percent interest in the bank, announced a complete takeover of the institution in December, buying out Nyambirai who was also chairman of the telecoms group’s local operations.
Nyambirai gave up his interest in the bank in exchange for a minority interest in the global operations of Econet Wireless and subsequently resigned as chairman of the Econet’s Zimbabwe unit.
“The result will be that TN Bank will become a 100 percent subsidiary of Econet Wireless. The result of the offer is that I will be a minority shareholder in Econet Wireless,” Nyambirai said at the time.
The deal was aimed at helping TN Bank meet new minimum capital requirements which have been set at US$100 million as well as give Econet a platform to promote its EcoCash service which has rattled the country’s banking sector.
Industry observers have suggested EcoCash could become the “biggest bank” in the country as it piggybacks on Econet’s reported 8 million subscribers prompting rival banks to press the central bank to regulate mobile money platforms.
The central bank however, recently rejected the calls with governor Gideon Gono saying: "As the monetary authority, we advise that mobile money transfer services are merely a payment system or delivery channel which does not amount to deposit taking.
"Accordingly, mobile money transfers should operate on a credit push principle where all e-money is backed by pre-funded balances which are held in banking institutions.”
Econet says EcoCash has more than two million subscribers and now handles up to US$100 million in urban-to-rural money transfers alone.