MOZAMBIQUE: THE RECAPITALIZATION OF MOZABANCO

A brief history of Mozabanco (MB) can be easily viewed on its website. From the outset we get the feeling we are dealing with a successful private banking institution. If we consult an organization website it is obvious we observe an optimistic view.

This bank started its activity in 2008 and has been accumulating notoriety since the beginning, with its ambitious expansion based on a rapid growth in a sustainable way, technological modernization and infrastructures, as well as betting on constant innovation. It has been progressing in the main cities of the country, where economic growth is more expected, and the bank is expected to broaden its horizons according to the requirements of its customers.

All this history and demarcation of objectives for a near future makes us realize a successful institution has risen, and that at least this private bank would be destined to success.

However, the recapitalization announced is provoking controversy, taking into account that the Pension Fund Management Company of the Bank of Mozambique (Kuhanha) employees became MB's majority shareholder. According to some analysts, this type of financial engineering is designed to maintain its sustainability, so as not to lose all the money invested so far. As this bank was bankrupt, the Central Bank ended up intervening to prevent selling off and especially so that the bank did not fall into the hands of investor perpetrators.

In any case, we have a situatin which indicates conflict of interests, although this operation needs further clarification.

Kuhanha aims to pay the Bank of Mozambique (BM) retirement employees and invest in the capital, financial among other markets. The Chairman of this management company is the president of the BM, so many people question whether there will be independence and impartiality in the supervision of MB, taking into account that bank supervision workers belong to Kuhanha and are an interested party.

They should inject about € 120 Million in the recapitalization of MB and will have a participation of 80%. The remaining 20% ​​will be held by Novo Banco (Portugal) - 10% and the Mozambique Capital - 10%.

It remains to be seen whether this whole process is truly transparent, as is ensured by BM. By 2016, MB was Mozambique's fourth largest bank with more than 90,000 customers.

Miguel Verde - Senior Consultant, Professor of International Relations