CFTC probes NBM, FDH retrenchments


The Competition and Fair Trading Commission (CFTC) has disclosed that it is carrying out an assessment to establish whether FDH and National Bank of Malawi (NBM) have breached any of the conditions that were given when the Commission granted approvals allowing for the acquisition of the Malawi Savings Bank and Indebank.

CFTC says the assessment will specifically seek to establish whether the levels of retrenchments undertaken so far are within levels necessary to reposition the merged banks.

Some sections of society, including the Malawi Congress of Trade Unions (MCTU) have faulted the new shareholders of MSB and Indebank for going against their promises of job security for staff made prior to the acquisition process.


But CFTC Executive Director, Wezi Malonda, said where a merger creates risks for job losses, CFTC can use its powers as set out in Section 8 of the Competition and Fair Trading Act to mitigate the likely job losses.

“In the case of the FDH/ MSB and NBM/Indebank mergers, the Commission found that the mergers created risks for substantial job losses. Therefore, in approving the mergers, one of the conditions imposed by the Commission was that the parties should maintain existing levels of employment. Where retrenchment would be absolutely necessary, all applicable labour laws and requirements would be observed,” Malonda said.

Malonda said the Commission is aware that, following approval of the two transactions, a number of employees in both the FDH/MSB merger and NBM/Indebank merger have been laid off and that the assessment will seek to establish whether the levels of retrenchments undertaken so far are within levels necessary to improve the efficiency of the merged banks.


She said should it be established that the parties have breached some of the undertakings, appropriate action will be taken in accordance with Section 50 of the CFTA.

“The Competition and Fair Trading Act provides for a set of criteria to be considered in assessing whether to authorise a merger or not. It is, however, important to note that the two transactions were motivated by underperformance of the two acquired banks,” said Malonda.

The FDH/MSB merger has seen 250 people losing their jobs while unspecified number of people were retrenched at NBM after the bank announced closure of 14 Indebank branches as part of the process of integrating Indebank into its own operations in accordance with the requirements of the Financial Services Act.

General Secretary of the Malawi Congress of Trade Unions, Pontias Kalichero, said the developments defeat plans of the Malawi Government to achieve decent work for all and that the situation will also likely worsen the unemployment situation in the country.

“Job creation is one of the pillars in the decent work for all that Malawi is implementing. Therefore, as a country, we have to make sure that we create space for workers rather than shrinking that space,” he said.

It has been close to a year since government secretly signed off deals disposing its majority stake in MSB and Indebank. At the time, there were fears that the government erred when it allowed the signing of agreements to seal the sales of the banks before filing a notification with CFTC to authorise the transactions.

But Malonda earlier told us that Malawi’s Competition Act makes provison for a non-suspensory regime for authorisation of mergers and acquisitions where parties to a merger in Malawi may make an application for authorisation before or after closure of the transaction depending on various circumstances surrounding the merger.

But both NBM and FDH said they fulfilled all the labour requirements when effecting the retrenchments.

Show More

Related Articles

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker