As the deadline for undercapitalised banks draws near, Zimbabwe Allied Banking Group (ZABG) and Royal Bank are making frantic efforts to conclude deals with as yet unidentified potential foreign investors.
Last week the Reserve Bank of Zimbabwe (RBZ) gave banks that have not met minimum capital requirements, up to February 14 meet requirements or face closure.
As at December 31 2011, 20 out of 25 operating banking institutions (excluding POSB) were in compliance with the prescribed minimum capital requirement of $12,5 million.
ZABG marketing manager Theresa Munjoma said the bank was holding discussions with a foreign investor and expressed optimism it would meet the two-week deadline.
“We have an investor that we have engaged,” said Munjoma. “The investor is now aware of the new deadline. We have pushed the process so we meet the deadline.”
According to latest statistics from the central bank, Royal Bank has $3,4 million capitalisation while Genesis Merchant Bank and ZABG has a negative balance of $3,2 million and $15,3 million respectively. In his monetary policy statement, RBZ governor Gideon Gono said:
“Accordingly, the undercapitalised institutions should do the honourable thing and voluntarily surrender their licences to the supervisory authorities, failing which they would be dealt with in line with the Reserve Bank’s Troubled and Insolvent Bank Resolution Policy.
“Accordingly, all non-compliant institutions, including those previously issued with special dispensations for compliance with minimum capital requirements, have up to 14 February 2012 to finalise their recapitalisation initiatives or consummate their mergers and acquisitions.
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“By no later than 29 February 2012, the Reserve Bank shall engage those institutions that would have failed to identify credible partners and concluded the recapitalisation transactions,” he said.
Royal Bank chief executive officer Jeffrey Mzwimbi said the bank had found a new investor and the deal was being reviewed by the central bank.
He said the bank had given itself a December 2011 deadline to meet the RBZ requirements.
“We are waiting for the RBZ’s approval. We cannot disclose the new investor that we have, but by the end of this week we would have meet the minimum capital requirements,” he said.
Commercial banks are required to have $12,5 million to meet the minimum capital requirements while merchant banks should have $10 million. In a statement last week, Royal Bank assured its customers it would meet the RBZ deadline.
“Royal would like to advise its clients that although the recapitalisation deadline was originally set for end of September 2012, we had already applied our own target of December 31 2011. To this end, discussions in this regard are at a very advanced stage and will be concluded within the time frame set by the RBZ,” the bank said in a statement.
Kingdom Financial Holdings Ltd has since concluded an agreement with Afrasia Bank limited that injected $9,5 million and made it possible for the bank to meet its minimum capital requirements. Efforts to get a comment from Genesis Merchant were fruitless.
A total of 26 operational banking institutions including the POSB, 16 asset management companies and 157 microfinance institutions were under the supervision of RBZ as at end of year last year.
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