FNB to allocate 24.99% shares to its employees, local pension funds

FNB Eswatini CEO Dennis Mbingo.

By Slindzelwe Nxumalo

FNB Eswatini has announced that are in the process of changing their ownership structure and allocation of part of the bank’s shareholding to its employees. The bank’s Chief Executive Officer (CEO) Dennis Mbingo said this effort was being pursued to finality by June 30, 2024 financial year, subject to final regulatory approvals, and had targeted the same investor profile of collective investment schemes that was approached previously.

Mbingo mentioned that during the 2018/19 financial year, the bank announced a stated intention to allocate a minority portion of its shareholding to local investors. He stated that this process was suspended in 2019 to ensure that all regulatory matters were fully addressed which was further delayed by subsequent events, specifically the 2020/21 pandemic and social disturbances.

“As committed to in 2018, a major part of this exercise involves allocating a material part of FNB Eswatini’s shareholding to employees of the bank through an Employee Trust that will distribute dividends to employees regardless of their seniority or length of service,” he said. The CEO mentioned that this would be a critical development and the planned participation of employees in company dividends, in addition to current performance reward schemes, further cements the bank’s recognition of the value employees play in the bank’s growth story.

“If all the approvals go through, we expect to over the next eight weeks to have Eswatini entities that own 24.99 per cent of the bank,” he said.
He mentioned that this was a major development for them as it was a substantial business. He said the approach they had taken was that they found it easier to conclude this by talking to pension funds, assets managers, and corporative societies or schemes of which they had already spoken to close to 10 of them.

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He said the 10 approached possibilities were now going through their evaluation and were expected to conclude the bilateral agreements in the next four weeks. “Once we do that we will then again list the bank on the Eswatini Stock Exchange (ESE),” he said. He stated that further updates would be issued once appropriate approvals had been received.

Furthermore, the CEO said the bank recognizes that the improvement shown in their 2023/2024 performance outcomes needed to be seen in the context of an increasingly complex environment that needs continued focus, and for the business to remain forward-looking. He said as significant as setting new performance thresholds for the bank was, the greater burden was in ensuring that long-term earnings were protected by investing in the right technology solutions that would feed future growth and meet their regulatory compliance aspirations.

“It is also critical that the bank continues to prioritize investment in physical infrastructure that will deliver the desired employee and customer experience,” he said. Mbingo stated that management therefore recognized that the Cost to Income Ratio improvement to 59.3 per cent which was 62.3 per cent in 20222 would remain under pressure as they continue to invest for future growth.

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He said over the short-to-medium term, the return on effort should continue to reflect in better and more diversified income lines. He added that the bank was expecting further opportunities for growth in the coming year. “We expect balance sheet growth to continue, with lending and liability-raising dominated by our Corporate and Commercial segments,” he said.

The CEO said the Retail segment had strong opportunities to widen its reach in advance, acquire more customers, and increase product sales per customer, backed by a very strong transactional platform. He mentioned that with decreasing financial traffic into branches as digital adoption continues to grow, efforts would continue to redirect the look and feel of their branches towards improved customer experience and to use them as a launch pad for digital migration.
“Management does expect branch usage by customers to remain a feature into the foreseeable future, but the nature of some branch services will materially evolve,” he said.

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