A legal dispute has erupted between Atlas Mara, an African banking group co-founded by former Barclays CEO Bob Diamond, and a Zambian financier who claims he was not paid in full for the sale of his lender. Rajan Mahtani, who established the Finance Bank of Zambia in 1986, is suing Atlas Mara for damages over a deal that took place in 2015 when he agreed to sell his bank for $215 million. However, he and the other claimants received less than a quarter of this amount, according to the High Court documents.
The claimants allege that Atlas Mara breached a share and sale purchase agreement by failing to pay the outstanding balance of $165 million, which was due in December 2016. They also accuse the bank of withholding information about its financial position and performance, and of making false and misleading statements to induce them to enter into the agreement.
Atlas Mara, which was launched by Diamond and British-Ugandan entrepreneur Ashish Thakkar in 2013, has denied the allegations and said it will vigorously defend itself against the claim. The bank said it had paid $50 million upfront and another $9.1 million in interest, and that the remaining amount was subject to certain conditions that were not met by the claimants.
The case is the latest setback for Atlas Mara, which has struggled to achieve its ambition of becoming a leading player in sub-Saharan Africa. The bank has faced a series of challenges, including the impact of the COVID-19 pandemic, the collapse of oil prices, currency devaluations, rising bad loans, and regulatory pressures. The bank has also been involved in a debt restructuring process and has sold some of its assets to reduce its exposure to certain markets.
The Zambian banking sector, where Atlas Mara operates through its subsidiary BancABC, has also been under stress due to the country’s economic woes and debt crisis. Zambia became the first African country to default on its sovereign debt since the onset of the pandemic, after failing to pay a $42.5 million coupon on one of its Eurobonds in November 2020. The country’s central bank has also tightened its supervision of the banking industry and revoked the licenses of two lenders in 2020.
Despite the difficulties, some analysts believe that there is still potential for growth and innovation in the Zambian banking sector, especially in the areas of digital and mobile banking, financial inclusion, and cross-border integration. According to the African Development Bank, Zambia’s banking sector penetration remains low, with only 38% of adults having access to formal financial services. The bank also noted that the sector shows a high level of concentration, with the four largest banks accounting for about two-thirds of total assets and deposits.
Source: The Times
