DBN not planning commercial banking operation

The Development Bank of Namibia (DBN) has set the record straight that it has no plans to transform into a commercial banking institution or fully take over the mandate of the now liquidated SME bank. This comes after the Bank published an expression of interest for the provision of a core-banking system which ignited speculation that DBN might be on a transformative phase.


The Bank’s senior communications manager, Jerome Mutumba confirmed that the need for a core-banking system arose as a matter of improving the bank’s systems.

“DBN has no intention of evolving into a commercial bank. The core banking system has nothing to do really with whether you want to become a commercial bank or a development finance institution or anything. Most organisations have an IT system that they use and I think you have heard of SAP for example. It’s a very common one. It cuts across industries, most businesses actually use it,” he said.


DBN has been utilising the SAP model and a review carried out on the system brought the Bank to identify the need for software that takes care of all gaps that are pertinent to its core-needs without introducing any further costs. 


“So what happens is that you look at the nature of your business then you look at the IT system that you have, whether it has models that takes care of the core functions that you want. So when you identify that there are some gaps and limitations, you go out into the market and see if there is a system that more or less can give us a tailor-made model of what we are actually looking for,” said Mutumba.


DBN is currently sourcing a core banking system that has the following features, core banking foundation, customer relationship management, loans management, financial management and information management.


“If you look at the features that we are sourcing, there is nothing that has to do with deposit taking or anything like that. So even if we can use a system that the commercial bank is using, we will not use those models that the commercial bank uses when they are taking deposits, ATMs or anything like that because we do not do those”


“We only stick to those models that are relevant to us, loan book management and other stuff that we are actually looking at. That we are turning into a commercial bank is out of the picture. And those comments that we saw people making, sometimes people want to lead a conversation that they do not necessarily understand. The tender is very clear, it says we are looking for those particular models,” he emphasised.


He added, “The SME Bank was a fully fledged commercial bank while the DBN is a development finance institution. It does not have a commercial banking license. It is not regulated by the central bank, SME Bank was regulated by the central bank because it was taking.”


Transforming into a fully-fledged commercial bank goes beyond merely changing IT systems into fundamentally changing the law that speaks to its mandate, Mutumba said. “DBN has a mandate that is drawn by law so in order for us to become a commercial bank we need to change the law and take it away from the space of a development finance institution,” he said.

Feb 20 2018

DBN lists Successful debut bond issue on NSX

The Development Bank of Namibia (DBN) issued the first notes under its N$ 2.5 billion Medium-Term Note Programme on Tuesday 5 September and raised a total amount of N$ 291 million.

The programme is part of the Bank’ strategy to diversify its source of funding and raise money on the market for on-lending to financially viable, environmental, and socially acceptable projects with developmental impact in line with the Bank’s business plan.

The 3-year bond (series “DBN20”) was issued through an oversubscribed auction process that was held on 31 August 2017. The bond pays a floating rate coupon quarterly, linked to the JIBAR rate and will mature on 4 September 2020.

The issue marks the first time that the Bank has formally approached Namibian capital markets to raise funding, and depending on future cash flow requirements, the Bank will be a regular issuer in the Namibian capital markets going forward. This is indeed a momentous occasion for the Bank which signaled market confidence in the Bank.

The Bank had planned to raise between N$200 million and N$ 300 million on its debut bond issue, and was well supported and oversubscribed by 26 staggered bids from 13 different investors both in Namibia and South Africa.

The total subscription amounted to N$ 428 million, and DBN issued a total amount of N$ 291 million at a spread of 190 basis points over the current JIBAR.

The Development Bank of Namibia’s N$2.5 billion Medium Term Note Programme aims to provide an alternative source of funding which forms part of the board approved funding strategy, in line with the bank’s targeted gearing ratio.

DBN has been well capitalized over the years by its sole shareholder- the Government of the Republic of Namibia, but now recognises that it needs to leverage its unencumbered balance sheet.

The Bank has also recently established a treasury function to manage its liquidity and funding needs, and is building an active presence in the Namibian money and capital markets in the realization of one of its core mandate.

The Development Bank of Namibia obtained a Long-Term Issuer Default rating of BBB- and National scale rating of AAA(zaf) by Fitch ratings.

This rating is equal to the sovereign (Government of the Republic of Namibia).

Sep 11 2017

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