/ 30 October 2001

Absa seals Banco Austral deal

Maputo | Tuesday

SOUTH African financial giant Absa will take over Mozambique’s scandal-plagued commercial bank Banco Austral after months of difficult negotiations, the government announced on Tuesday.

Banco Austral was Mozambique’s largest bank until its privatisation three years ago.

A Malaysian-led consortium bought 51% of the bank, but then it quickly racked up more than $200 million in bad loans and went bankrupt.

The bank’s woes took a violent turn when its provisional chairman Antonio Siba Siba was killed in August, one day before he was due to hand over to Absa details of its financial situation.

Siba Siba was a senior central bank official appointed to take charge of a new sale of Banco Austral to avoid its liquidation, as had been recommended by the World Bank and the International Monetary Fund (IMF).

The deal is expected to cost Absa only about $15-million, which will give it an 80% stake with the remaining 20% in the hands of the Mozambican state for later sale to workers.

The bank still has the largest national presence in Mozambique, with branches widely scattered in both urban and rural areas from when it was the state-owned People’s Development Bank.

A press release from the planning and finance ministry said Absa will formally take over the bank November 19. – AFP