Bots inches close to have first indigenous commercial bank
By Mpho Tebele
GABORONE – Botswana is inching close to establishing its first indigenous commercial bank as Botswana Building Society (BBS) announced that its shareholders had approved a resolution to turn the society into a commercial entity..
Botswana has 10 commercial banks and the majority have headquarters in South Africa and other countries.
BBS Managing Director Pius Molefe revealed that 99.97 percent of the society’s shareholders had approved a resolution for the society to demutualise thereby by allowing it to convert into a commercial bank.
Demutualisation is the process through which a mutually owned body becomes a limited company.
“The decision by stakeholders is vote of confidence on the direction we would like to take our society which is to become Botswana’s first indigenous commercial bank,” said Molefe.
He said part of the process would before BBS to submit an application for conversion to the Registrar of Building Societies who is the Permanent Secretary in the Ministry of Finance and Economic Development.
Molefe said if the Registrar is satisfied with how demutualisation process was conducted, he will issue a conversion Certificate and BBS will the invite shareholders to indicate how many shares they would like to take in the new entity.
Once that has been done BBS will submit an application to the Registrar of Companies for it to become a company known as BBS Limited.
He said thereafter in December 2017 or January 2018, BBS Limited will file an application for a banking license with the Bank of Botswana.
Molefe said the application will take up to six months to be evaluated and the hope is that BBS will start operating as a commercial bank from the first quarter of 2019.
According to Molefe, the Society qualifies to apply for a banking license as qualification for the license is P5million while BBS is valued at P4billion.
He further explained that there is no need to ask for waiver from the Central Bank as his institution has had several bilateral and trilateral meetings to ensure the conversion goes well.
“We do not see us failing once we have taken up banking. We are already operating as a bank. We are saving our clients’ finances; we are granting loans. We are limited by the Societies Act to provide such services as Forex. As a bank we will be adding more products like Debit, Visa/Master cards,” said Molefe.
BBS was founded in 1976 succeeding the United Building Society of South Africa which had been in operation from 1971.
It was founded to provide affordable mortgage finance, investment and savings products to Batswana something.
One of the long enduring highlights for BBS, Molefe said, is that it has a strong legacy of financing property acquisition across Botswana, be it in urban or rural areas.
“Many families in Botswana can bear testimony to this fact. As for the lows, the main one is the decline in the economic environment which, however, put into sharp focus the need for the Society to demutualise,” said Molefe.
Molefe also explained that BBS is not transitioning to a bank status but it will first has to apply to be a company and then submit an application for a commercial banking license.
“What has necessitated BBS to apply to become a bank is that it is currently reliant only on mortgages as well as investment and savings products. It would now like to offer customer more products and services. In addition, it would like to increase shareholder value through a diversified income streams,” he said.