ROYAL Bank of Zimbabwe depositors are set to be compensated a maximum of $500 by the Deposit Protection Corporation (DPC) following the liquidation of the bank.
Business Reporter
The bank was placed under provisional liquidation on February 20 after it surrendered its licence when it failed to secure new investors.
DPC chief executive officer John Chikura was appointed provisional liquidator.
“Under its current mandate, the DPC will immediately upon verification, pay all bona fide depositors up to the maximum insurable limit of $500 per depositor,” DPC said in a statement yesterday.
Chikura said all depositors with balances above the insurable amount should seek assistance from the corporation.
In July last year, Royal Bank directors resolved to surrender its banking licence following the deterioration of its financial position.
The decision followed failure by the institution to raise the requisite minimum capital within the stipulated regulatory timeframes and to conduct banking business in accordance with sound administrative and accounting practices, and risk-management procedures.
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Investigations by the Reserve Bank of Zimbabwe had indicated that the institution was not in a safe and sound financial condition.
As at June 30 2012, Royal Bank was critically undercapitalised with a core capital of $1,850 million, which was way below the minimum regulatory capital requirement of $12,5 million for commercial banks at the time.
The minimum capital requirements have since been increased to $100 million for commercial banks.
The bank was also saddled with chronic liquidity challenges. Relative to the balance sheet size, the bank had a huge negative liquidity gap of $3,03 million in the critical 0-7 day time band as at June 14 2012.
DPC was established to among other roles, compensate depositors for losses incurred in the event of insolvency of a contributory institution.
Chikura also said the fund provided cover that safeguards depositors against losses incurred when a bank or deposit-taking institution closes.
