HomeBusinessAfrAsia Bank: Demise of a Kingdom

AfrAsia Bank: Demise of a Kingdom

The recent cancellation of AfrAsia Bank’s (formerly Kingdom) operating licence marked the demise of a brand synonymous with the liberalisation of the financial services sector in the 1990s.


Who would fault an institution that was built in a small office with one desk overlooking the Africa Unity Square in Harare’s central business district?

Or an institution in which five individuals, sharing a common vision, agreed to work together and had a pact that the leadership position was going to be rotated among the quintet — a feat that eludes a number of institutions even today — where leadership renewal is an alien concept.

The founding directors — Bhagav Purohit, Franky Kufa, Solomon Mugavazi, Lysias Sibanda and Nigel Chanakira — were glued together and parted ways when the organisation was already established.

Purohit left in 1996 to pursue a career in international banking. Mugavazi, who headed Kingdom Stockbrokers, left in 2002 to set up a private conglomerate while Lysias Sibanda, who led Kingdom Merchant Bank and subsequently became group CEO, retired in 2004.

Kufa was at one time reassigned to Zambia to look after Kingdom’s interests. He returned home as chief operating officer assuming the post of group CEO in 2005. Kufa left Kingdom executive management in 2006.

Chanakira had two stints as group CEO, becoming the face of the institution to the extent that his name and Kingdom became synonyms.

Kingdom had dreams to conquer the world. One such dream was listing on Wall Street.

After agreeing to merge with Meikles, Tanganda and Cotton Printers to form Kingdom Meikles Africa Limited, Chanakira said the group was destined for success.

“The Wall Street dream is alive and well; in fact, the prospects of attaining it have never been brighter,” Chanakira told Standardbusiness in 2007.

He spoke of his desire for Kingdom to join the big boys: “When I walked on the cobbled street called Wall Street, I was struck by how ordinary and unassuming it was, and yet it is the address of the most glamorous bourse in the world. I knew then that Kingdom would list on Wall Street.”

The intended marriage did not last long as they divorced due to irreconcilable differences between Chanakira as CEO and John Moxon the board chairman.
The parties went their separate ways and Meikles divested from Kingdom, eroding the bank’s capital position in the process.

Kingdom was to experience a lean spell but kept on soldiering, capitalising on the brand equity and also profiting from the sympathy dividend from depositors who considered the bank a foster child of the financial sector’s liberalisation.

At the inception of the multi-currency regime, the institution attracted a number of depositors after relaxing requirements at a time other players were tied to the stringent regulations that had prevailed in the Zimdollar era.

As the deadline set by the central bank to raise minimum equity capital to $12,5 million approached, the institution scurried for potential suitors.

One such suitor that heeded the call was Mauritian banking group AfrAsia that snapped up a 35% stake in a deal worth $10 million in 2012.

As the institution had a deep hole, AfrAsia’s entry did not bring the metamorphosis that was needed at the time. The bank continued to struggle with it’s liquidity challenges with endless queues a permanent feature at branches.

The entry of Mauritian Banking group, AfrAsia Bank Limited in 2012 was cheered as a fillip that would return Kingdom to its glory days. There were fights over escalating non-performing loans, the bulk of them unsecured.

AfrAsia Bank Limited CEO James Benoit recently blamed “legacy issues” and the harsh economic environment as contributing factors inhibiting the recapitalisation of the bank.

Whereas the founders had a Wall Street listing dream, the only list the former Kingdom now joins is that of failed banks — an anathema to the financial services sector liberation.

The failed banks include Royal, Barbican, Capital, Interfin, First National Building Society and Allied Bank among others.

Kingdom survived the 2004 banking storm riding on its diversified structure “where deposits moved from one subsidiary to another, from Kingdom Bank treasury to Discount Company of Zimbabwe”.

“We have learnt much about running a business in volatile times, and honed the strategies necessary to thrive and grow in times of stress. Blue ocean strategies in particular have enabled us to create and define our own space in the form of markets and relationships, which preserves and enhances value for shareholders and clients,” Chanakira said then.

Those survival strategies eluded the bank in 2015 forcing it to voluntarily surrender the licence.

Recent Posts

Stories you will enjoy

Recommended reading