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African Banking Corporation to open new markets across Africa
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African Banking Corporation will this year splash some $20 million (Z$5 billion) to open up fresh business opportunities across Africa. A further US$20 million would be injected, as Tier 2 capital, into the group's operations in Zimbabwe, Botswana, Tanzania, Zambia and Mozambique, group spokesperson Beki Moyo indicated from his South Africa offices.
This “Tier 2” capital can become a form of reserve debt that usually ranks below other depositors, and measures the financial strength of a bank. And in the event of bank failure or insolvency, funds from this reserve would ensure that depositors are paid first and shareholders last. The other form of capital would be depositors' funds, referred commonly as Tier 1.
Mr Moyo indicated that ABC had also secured $40 million long-term debt capital from the Botswana Insurance Fund Managers to finance its ambitious expansion projects and boost capital reserves. This brings to a total $60 million long-term debt that ABC has accessed in the last four months to finance company growth. The capital amount would be paid fully by 2020 while interest should be payable half-yearly.
Some of the funding has already been deployed to the Botswana, Mozambique, Tanzania and Zambia operations resulting in all subsidiaries attaining minimum Tier 1 capital of $10 million. A spokesperson from Botswana Insurance Fund Managers said: "The injection should catapult the business to the next level.”
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