By George Lumwira

Copyright mwnation

National Bank of Malawi plc (NBM) plans to create a holding company to oversee its diversified portfolio of subsidiaries, a model financial market experts describe as the best from a regulatory and governance perspective.

In a request for proposals for creating National Bank Holdings signed by NBM plc chief executive officer Harold Jiya, the Malawi Stock Exchange-listed bank is seeking consultancy services to develop the operating model of the new entity.

Reads part of the statement: “The purpose of NBM Holdings plc is to establish an agile and strategic structure capable of starting the group’s collective ambitions in finance, investment, fintech and other emerging effective oversight and governance.”

It says NBM Holdings envisions establishing itself as a strong investment vehicle and strategic oversight body to deliver long-term shareholder value and support national development.

NBM wants the consultant to assess the effectiveness of the current operating model, identify gaps and areas for improvement in the current structure and benchmark operating models from regional and international holding companies in similar sector.

When asked on Monday whether NBM will be delisted and then list the holding company on the 16-counter MSE or that both the holding company and the bank will be listed, Jiya said they will assess the models as investors would want to also invest in the holding company.

He said: “That is what we want the consultant to work on, among other issues. Obviously, there will be people who only want shares in the bank without other subsidiaries while others would want the holding company.

“We will explore all options to ensure we will take care of all investors and stakeholders.”

In an interview on Monday, stock market investor Benedicto Nkhoma said from a regulatory perspective, the holding company model is the best as the companies under it are regulated differently.

He said: “Given the growth of the bank, it is important that they set up a holding company to ensure that there is focus in the running of the entities under it.

“You will recall that CDH, Nico Holdings, First Capital Bank did the same thing to help the institutions streamline the operations and ensure focus and efficiency.”

Nkhoma said NBM’s current structure does not support its operations as executives generally focus on running the bank and may lose focus on the other entities that they own.

He said in the proposed model, chief executive officers of subsidiaries report to the group, which gives the institutions strategic direction, inculcate a certain culture and values and also assist in accessing shared services such as audit, risk, compliance, systems and marketing.

Financial market expert Brian Kampanje said the move demonstrates NBM’s growth, observing that the proposed structure will enhance supervision of the subsidiaries and provide strategic direction to the executives.

He said: “This will increase the productivity of the subsidiaries in the commercial banking, development bank, general insurance, pension, stockbroking and other financial services.

“The setup period is short and other directives of fit and proper test as well as corporate governance are complied with by NBM already.

Kampanje said this is a positive sign that Press Corporation plc, which owns 51.73 percent in NBM, is gearing for significant growth.

NBM subsidiaries include NBM Development Bank, NBM Capital Limited, NBM Asset Managers, Stockbrokers Malawi Limited, Akiba Commercial Bank in Tanzania and United General Insurance.

When NBM Holding plc is registered, it will join holding firms such as Nico Holdings plc, FDH Financial Holdings Limited, Continental Holdings Limited, FMB Capital Holdings plc and LifeCo Holdings Limited.

Apart from PCL, other NBM shareholders include Old Mutual Group, which owns 24.83 percent, the public 22.03 percent with employees owning 1.41 percent.