Fides Staff Retrenchment a Concern in Merger

THE acquisition of Fides Bank Namibia Limited by the Trustco Group raises a significant public interest concern in the form of employment losses, the Namibian Competition Commission (NaCC) says.

Speaking at a media briefing in Windhoek on Friday, NaCC chief executive officer and secretary to the commission, Mihe Gaomab II, said the commission has noted that the proposed merger will have a negative impact on existing employment opportunities.

“The proposed transaction does not raise any competition concerns. However, it raises a significant public interest concern in the form of employment losses,” he said.

Fides is the first micro-finance bank established in Namibia since independence in 1990. It specifically targets the rural population seeking to develop income-generating activities.

The bank received its provisional banking license in 2009 and its permanent license in 2010, with its transition from non-governmental organisation (NGO) to commercial bank.

The Bank of Namibia (BoN) announced earlier this week that it has approved the acquisition of Fides Bank by Trustco Group Holdings Limited.

The Central Bank has also approved the changing of the bank’s name to Trustco Bank.

“The approval was granted in terms of Section 54 of the Banking Institutions’ Act, 1998 (Act No. 2 of 1998) as amended, and is effective from 19 August 2014. The public is further notified that Trustco Bank Namibia Limited is permitted to engage in banking business activities with any person in Namibia, after conclusion of the acquisition transaction of Fides Bank,” a statement issued by BoN said.

Fides currently employs approximately 100 permanent employees and 23 trainees, who would be retrenched post-merger as it was submitted by the merging parties, Gaomab stated.

He said the commission resolved to approve the merger with the condition that at least 20 employees are retained or re-employed from the retrenched workforce within three months from the date of approval of the transaction.

“The commission also proposed that the merged undertaking makes available an amount of N$700 00 for the purpose of training retrenched employees. The indicated amount should translate into N$8 750 per employee who are subjected to retrenchment,” he said.

Gaomab noted that Fides Bank is operating in a niche market and is a failing undertaking.

“Competition in the relevant market is not likely to be harmed as there are a number of competitors as well as three new entrants that have recently been awarded banking licenses by the Bank of Namibia,” he said.

The bank currently has five branches in Oshakati, Oshikango, Ondangwa, Ongwediva and Outapi.

Fides opened its Windhoek branch in the Katutura residential area in November 2012 with the aim of offering financial services to micro-entrepreneurs in that area. The bank, however, stopped providing loans to its clients at the Katutura branch at the beginning of this year.

Local media reported in February this year that Fides planned to downsize its activities in the capital as they were too costly to develop, and have not yielded the expected socio-economic returns.

The operations also proved to be economically unsustainable.

Trustco, in a media statement issued to announce the purchase of Fides Bank on 22 May 2014, said the bank’s loan portfolio currently consists of over 14 000 borrowers, ranging from individuals to small businesses.

Its savings’ portfolio also includes the deposits of 40 000 individuals.

Key to the new bank’s expansion strategy will be the use of mobile banking and alternative service channels, combined with traditional infrastructure.

Small-and-medium enterprise (SME) lending will continue to be a priority for the bank, with the goal of nurturing and supporting local entrepreneurs.

– Nampa

Source : The Namibian