President Peter Mutharika on Wednesday suspended the sale of Malawi Savings Bank (MSB), saying he had made that decision after considering the views of the proponents and opponents in the raging debate.
He, however, said it is imperative that the government disposes its stake in MSB for the good of the national economy.
Mutharika, who spoke through his Press Secretary Gerald Viola at an impromptu press briefing at Kamuzu Palace in Lilongwe, said following the suspension, the government intends to review the process that was undertaken.
“The review will cover all the aspects of the transaction. I am, therefore, inviting all those who have spoken on this matter, including the Members of Parliament, civil society organisations and the experts to come up with reasonable proposals covering all the aspects of the transaction so that we can map the way forward,” said Viola, who also announced that Mutharika will now be speaking to the media through his press team on some issues of national importance as is the case with other leaders world over.
Mutharika said on the issue of toxic loans that has been an on-going tussle between the bank and its debtors in the courts, he had decided to put in place a “Special Purpose Vehicle” in order to ensure that there is full recovery of all the debts.
He said the special vehicle will be charged with the responsibility of recovering every tambala owed to the bank.
No debtor will be spared,” declared Mutharika.
He explained that the Special Purpose Vehicle is a company which will be managed and directed by eminent and professional persons who have been specially selected because of their professionalism, expertise and skill in the corporate business world.
Although he did not mention the people to manage this company, Mutharika said they will be eminent Malawians who will act independently and for the good of the country.
“The details of this arrangement will be gazetted within the next few days,” said Mutharika through Viola who declined to take any questions.
He, however, observed that apart from the pressing problems of recapitalisation and Basel II compliance issues, public discussion has now centred on the toxic loans and this is the reason the problem of toxic loans which had severely affected the bank’s operations has been addressed separately.
Mutharika also said it is important to learn from the past on how similar transactions have been handled.
“Not too long ago, Air Malawi found itself in a similar situation. There were people who strongly opposed inviting a strategic partner in Air Malawi. There were others who saw the need for that initiative. We argued, quarrelled and rumbled about it. By the time we concluded the transaction, Air Malawi was a mere shell and government ended up with huge debts to settle,” explained Mutharika.
He, therefore, said Government would like to avoid a similar situation happening in the case MSB because it would be more detrimental to the interests of the country than was the case with Air Malawi.
Mutharika said while government will be disposing off its interest in the bank all sides of the debate need to speak about this matter in a manner which is fair, objective and non-partisan.
“On my part, I would like to assure the nation that whatever happens, government will secure legally binding undertakings to ensure that no single branch of the Malawi Savings Bank is closed,” he declared.
He said not everyone can speak with authority on matters affecting the financial services sector and, therefore, those who have ventured to do so have mostly spoken from a partisan point of view or without full knowledge or proper information.
“As a result, the real and actual financial status of Malawi Savings Bank has been blurred,” he observed.
He said the problems being faced by MSB go back several years and that the decision to dispose government’s controlling interest in MSB was made in 2013.
“My initial reaction to that decision was that I was not going to be part of it. I had the same reasons as those who are against the transaction now. However, there were strong recommendations from the Regulator of Financial Services as well as the captains of the financial services industry in favour of the disposal. It became clear to me that doing nothing would result in the collapse of the bank and the consequent damage to the financial services industry would be enormous,” he explained.
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