Talks of a possible merger between two of the country’s banks, the New Finance Bank (NFB) and Opportunity Bank Malawi (OBM) have collapsed, NFB Chairperson Francis Pelekamoyo said on Friday.
The development comes barely a month after the two institutions entered into negotiations in a desperate attempt to meet the Reserve Bank of Malawi capital requirement under Basel II.
The merger was supposed to be effected on May 1 2017 but according to Pelekamoyo, the talks have been aborted.
“New Finance Bank Malawi Limited (NFB) advises that negotiations for the proposed merger with Opportunity Bank Malawi have been aborted. Members of the public are advised to be guided accordingly,” said Pelekamoyo in a brief statement.
He could, however, not indicate how his bank will move forward to meet the capital requirements of Basel II following the collapse of the merger talks.
In January 2014, Malawi adopted an international business standard called Basel II that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations.
The development has already seen two government-owned banks, Malawi Savings Bank and Indebank, being sold to FDH Bank and National Bank of Malawi respectively, in an attempt to keep their operations moving.
OBM officials could not be reached at the weekend to comment on what other strategies the bank will put in place to keep pace with Basel II requirements.
RBM Spokesperson, Mbane Ngwira, said on Sunday that following the adoption of Basel II on January 1 2014, all banks have to ensure that they are adequately capitalised at all times.