Bank of Nevis International (BONI) is suing […]

Bank of Nevis International (BONI) is suing Zambia’s central bank for $40 million, alleging that the regulator blocked its stake in a listed lender by applying ownership rules that were not yet in force.

BONI contends that the Bank of Zambia assessed its investment based on regulations that had not been officially enacted at the time.

When contacted by the Zambian Business Times (ZBT), the Bank of Zambia declined to comment, citing the ongoing legal proceedings.

“As the matter of Bank of Nevis International Limited v Minister of Finance and National Planning and Others (2024/HP/1121) remains sub judice, we regret that we are unable to comment on it,” the central bank stated in an official response to ZBT’s inquiry.

 According to a statement, BONI bought 24.8% of Investrust Bank on the Lusaka Securities Exchange in 2021 and 2022. That made it the second-largest shareholder after ZCCM-IH, the state-controlled investment group.

“It then sought recognition from the Bank of Zambia as a significant shareholder, as the law requires.” BONI alleges the central bank assessed it against “fit and proper” requirements that were not formally prescribed until December 2023, more than a year after the assessment began.

The statement alleges that BoZ had itself referred to BONI as Investrust’s “new shareholder” in February 2023, before later saying it had no regulatory clearance to be a shareholder and beginning a process to “de-recognise” its holding.

 “In January 2024 the Bank of Zambia refused to recognize BONI as a shareholder. Three months later it took control of Investrust, citing insolvency. The bank was later liquidated. BONI says it received neither notice nor compensation.”

 The investor also alleges that the appeals tribunal required by law to hear such challenges was never established. “Independent advisers have put its losses at no less than $109 million. It is claiming $40 million.”

“BONI filed for judicial review at Zambia’s High Court in July against the central bank, the finance minister and the attorney general, alleging breaches of the Banking and Financial Services Act.”

“The court has rejected three attempts by the Bank of Zambia to have the case struck out or to remove itself from the proceedings. Those rulings were procedural. A full hearing is expected next year.”

Article by ZBT Analyst

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