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Allied bank in limbo

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ALLIED Bank anchor shareholders are yet to transfer property pledged to shore the bank’s capital levels as losses continue to weigh down operations, NewsDay Business has learnt.

Bernard Mpofu

Transport minister Obert Mpofu’s investment vehicle, Trebo & Khays bailed out the bank from closure in 2012 by agreeing to invest under an asset-backed transaction.

The bank was teetering on the brink of collapse after failing to secure an investor to help the institution meet the then minimum capital requirements of $12,5 million.

According to confidential Reserve Bank of Zimbabwe (RBZ) report, the bank’s core capital declined last year at a time when other financial institutions had embarked on capital-raising initiatives to meet the central bank’s minimum capital requirements.

In 2012, the central bank announced an eight-fold rise in minimum capital requirements to $100 million, a figure seen as astronomical for most locally owned financial institutions.

The bank is one of the seven financial institutions which failed to meet the December 2012 minimum capital requirements of $25 million.

“The bank’s core reported core capital declined from $12,59 million as at August 2013 to $11,18 million as at September 2013 due to persistent losses that the institution continue to incur,” the report said.

“The properties contributed as capital by the major shareholder are yet to be transferred into the bank’s name, notwithstanding the waiver granted by ZIMRA on the payment of capital gains tax.

“There has been no progress made in the bank’s recapitalisation initiatives.”

Allied Bank chairperson Farai Mutamangira referred questions on the bank’s capitalisation to acting chief executive officer Florence Gowora, who declined to comment citing last year’s gag by the central bank barring bankers to comment on the status of their capitalisation.

“We are not allowed to comment on the capital position of the bank, the Reserve Bank should comment on that,” she said.

The bank recorded a cumulative loss of $4,65 million for the period ended September 30, 2013.

“The bank is facing liquidity challenges with total outstanding payments of $7,39 million as at September 30, 2013. The bank’s prudential liquidity ratio declined from 18,43% as at August 31, 2013 to 16,99% as at  September 2013, against the regulatory minimum of 30%,” RBZ said.

“The Reserve Bank directed the bank to report its liquidity position on a fortnightly basis, effective October 2013, to facilitate close monitoring of the condition of the bank.”

The bank, the report further stated, submitted a request for liquidity support to the RBZ by way of release of statutory reserves, assistance in retrieval Office of Foreign Assets Control (OFAC) held funds ($1,1 million) and lender-of-last resort facility of $2 million.

But, it is understood that RBZ advised Allied Bank to expedite transfer of properties contributed by Mpofu with a view to leveraging the properties to access liquidity from various counterparties. The bank is under US targeted sanctions.

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