×
NewsDay

AMH is an independent media house free from political ties or outside influence. We have four newspapers: The Zimbabwe Independent, a business weekly published every Friday, The Standard, a weekly published every Sunday, and Southern and NewsDay, our daily newspapers. Each has an online edition.

Capital Bank seeks downgrade

News
ONE of Zimbabwe’s remaining merchant banks, Capital Bank, is seeking shareholder approval to downgrade to a micro-bank.

ONE of Zimbabwe’s remaining merchant banks, Capital Bank, is seeking shareholder approval to downgrade to a micro-bank as the liquidity crunch continues to bite the domestic market, the bank’s former chairman has said.

Victoria Mtomba

Addressing journalists on Tuesday, Capital Bank board member Joseph Kanyekanye said the bank’s shareholders would next week convene a meeting to consider converting its operating licence into a micro-bank.

He said there were various options that were currently being worked out for the bank.

“We have various plans underway and we are seeking shareholder approval and an announcement would be made next week once shareholders approve the plan,” he said.

He said the bank would move towards the micro-banking platform and would look at ways to move in that particular direction.

Kanyekanye said the bank had already made an application to the Reserve Bank of Zimbabwe (RBZ) and would service employees that make contribution to National Social Security Authority (NSSA).

“It (microfinance) will be able to focus on housing development and will have tailor-made stands for employees. Those who earn $300, this is the bank to bank with if you want stands,” he said.

The development comes at a time when the future of merchant banks in Zimbabwe is increasingly looking bleak as the only two remaining such financial institutions — Capital Bank and Tetrad — are devising alternative ways to survive in the harsh banking environment. Tetrad Bank has since applied for a commercial banking licence from the RBZ.

Tetrad is still working on the requirements, while Capital is awaiting shareholder approval for the transaction.

He said Capital Bank had problems even before it was put under curatorship, but through his chairmanship, 60% of the $40 million owed to depositors has been paid out on a structured programme. He added that NSSA resolved that it would not pay out money to the banks it has interest in such as ZB Bank and FBC Bank due to the exposure that the company would have after.

Capital Bank was placed under curatorship in 2011 and in 2012 NSSA, the majority shareholder, injected $24 million for the revival of the bank.

RBZ governor Gideon Gono in August 2012 announced an eight-fold increase to $100 million in minimum capital requirements for commercial banks in a bid to minimise systemic risks in the fragile financial services sector.

Micro-banks under the new minimum capital requirements are supposed to have a minimum capital of $10 million.

Financial institutions were expected to have complied by June 30, 2013, with part of the new minimum capital requirements of $50 million.