The demutualisation of Botswana Building Society (BBS) that will transform it from a society into a fully-fledged commercial bank is still dragging on almost four years since its Transition Bill was passed by Parliament. In the recently published financial results for the year ended 31 March 2017, the society says the issue will be sorted out with a special resolution at a Special General Meeting scheduled to take place immediately after the normal Annual General Meeting which will be held on August 24. BBS chairman, James Kamyuka, says notices have already been sent to shareholders, including the conversion statement. The issue was supposed to have been concluded in November last year but the deadline was shifted as drafting of key documents such as the Conversion Statement had not been completed by then. Once the process to turn BBS into a commercial bank is complete, it will become the first indigenous bank in Botswana since all the commercial banks operating in Botswana are all of foreign origin. According to BBS Managing Director, Pius Molefe, the expectation is that BBS will operate fully as a bank by the first half of 2019, subject to obtaining the relevant shareholder and regulatory approval. “Strategically, this transformation will result in stronger BBS financially and operationally which will also deliver high shareholder value over the coming years,” Molefe says.
BBS is first expected to convert into and be registered as a company from a society owned by members before it could submit its application for a banking license with Bank of Botswana (BoB). Once it turns into a commercial bank, BBS will find a competitive market of established players that offer an array of products to their customers. There are currently 10 licensed commercial banks operating in Botswana with a combined asset base of P76.6 billion based on the 2015 figures provided by the central bank. In the just ended financial year, BBS made a profit of P47.9 million which was a decrease of 13 percent form P54.9 million recorded during the previous year. The society also witnessed a decrease in assets by 11 percent from P4.1 billion to P3.6 billion while interest income decreased by 2.5 percent from P307 million the year before to P299.4 million. During the current period, BBS paid out P59.7 million in dividends to shareholders which are a decrease of P59.8 million that was declared in the prior period. Kamyuka said they had to dig deeper into their reserves to augment the dividend payout owing to the Society’s current business model where shareholders are paid a dividend rate without taking into account the performance of the institution during that given period. He says this is not sustainable but expects the situation to change was BBS operates as a commercial bank.