MCB welcomes the New Year by voting new structure plan
The new structure of the MCB Group will be put in place by the end of the first quarter of 2014 where the bank will be divided into three different segments (Image: mcb.mu)
MCB Group, the Mauritius-based financial service major, has firmed up plans for organizational restructuring, expected to take place by the end of the first quarter of 2014.
The group’s activities will be divided into three different segments – Banking, Non-Banking Financial and Other Investments – which were voted in at a special meeting held on 27 December.
The new structure, announced in March 2013, separates the groups banking and non-banking activities and allows the Bank to better position itself for future growth.
With the non-banking financial sector continuing to expand and overseas activities garnering 46% profits for the group at the end of June 2013, the need to recognize these significant changes in revenue and profit mix has led to the restructuring exercise.
A newly created legal entity, MCB Group Limited, will be the holding company of the group.
Some 19,000 MBC shareholders will exchange their shares against those of the new holding company, ensuring that their interest in the group as a whole remains unchanged.
A new “Group Employee Share Option Scheme” (GESOS) will also be implemented, in place of the existing employee share option plan which stands cancelled. All the advantages and the conditions of the current Scheme will be kept under the new GESOS.
Further, this restructuring exercise will result in the transfer of certain investments currently held by MCB towards the new structure.
Also, the basic stockholder equity of MCB will undergo a reduction even if transfers are kept neutral at the level of the group. At the level of MCB’s capital, accounting for the needs of prudential ratios, this reduction is considered a little more than Rs 3 billion.
Accordingly, the group undertook two funding measures which increased the stockholders’ equity by approximately Rs 5.4 billion in order to compensate for this decrease, while also providing access to long-term foreign currency up to USD 150 million for future development.
In July 2013, the MCB launched an issue of ‘Floating Rate Subordinated Notes’ through the Stock Exchange of Mauritius, enabling the bank to mobilize Rs 4.5 billion. In October 2013, the MCB sealed a financing agreement for $150 million with the African Development Bank. Of this, $30 million has been allocated in the form of a 10-year subordinated loan with the remainder $120 million being a seven year term loan.
Overall, this has enabled the MCB to strengthen its capital by a little over Rs 900 million and additional equipped it with funding of around Rs 4.5 billion in foreign currency to accelerate the development of the bank’s activities in Africa.