The Ministry of Finance has ordered the Reserve Bank of Zimbabwe to recover part of funds earmarked for sustaining domestic trade from Interfin Bank after it emerged that Treasury and a regional bank have an exposure of nearly $50 million to the troubled bank.
Treasury yesterday announced that the recent placement of Interfin under six months’ curatorship and its illiquidity had undermined the performance of the Zimbabwe Economic Trade Revival Facility (Zetref).
Zetref is a $70 million facility jointly funded by the government and the African Export Import Bank (Afreximbank).
Signatories to the facility were the Finance ministry on behalf of the government, Afreximbank and local banks FBC Bank, NMB Bank, TN Bank and BancABC with Interfin Bank as the administrative agents.
Under the facility, participating banks would submit their clients’ projects to the Zetref Committee through Interfin Bank.
Following approval by the committee, projects were then submitted to Afreximbank (the main lender) for further approvals in line with requirements.
After Afreximbank approvals, banks would submit requests for drawdowns to Afreximbank.
“The failure by Interfin to honour its obligations as the Zetref local administrative agent to the extent of $17,4 million, coupled with its failure to honour obligations with regards to other Afreximbank and PTA Bank facilities in excess of $30 million is clearly undermining the efforts of government to support improved capacity utilisation across the various subsectors of industry,” reads the statement.
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“Government will be working with the Reserve Bank to ensure the recovery of Zetref funds as well as all other funds targeted at on-lending to industry and currently held up at Interfin.”
The government contributed $20 million in September 2010 while Afreximbank chipped in with $50 million.
The balance of funds currently held up at Interfin from government’s contribution of $20 million, according to the statement, stood at $17 396 381 after the bank disbursed part of the funds last October.
Interfin, also owes $9,7 million to the Afreximbank, being the balance from $15 million extended to the bank for on-lending to clients under a facility separate from Zetref.
Following the failure lately by Interfin to disburse funds, the Ministry of Finance said it then advised the central bank to investigate the financial institution.
An investigation into the bank led to its curatorship early last month.
“Subsequent release requests to Interfin from Afreximbank, out of the government contribution, were raised to $5 million in fortnightly batches with the first one due on November 11 2011,” read the statement. “These releases were not forthcoming from Interfin, notwithstanding follow-ups through meetings and letters over the expeditious processing of Zetref loan applications of companies — a development which prompted the Ministry of Finance to request the Reserve Bank in April 2012, to investigate Interfin and ascertain the financial situation at the bank.”
