TRUST Bank Corporation (TBC) got a lifeline yesterday after the High Court granted the institution three weeks to submit an opposing affidavit against the proposed liquidation.
By Business Reporter
The reprieve came as the Deposit Protection Corporation (DPC) had announced plans to begin liquidation processes at the institution.
Trust’s licence was cancelled last month after the central bank said it was abusing depositors’ funds and its capital position was deteriorating.
DPC chief executive officer John Chikura was subsequently appointed provisional liquidator.
At yesterday’s liquidation court hearing at the High Court, TBC’s lawyer Advocate Thabani Mpofu got the reprieve on the basis that depositors would not support any liquidation process, but will favour the injection of capital by an investor.
A South African company, Mining Oil and Gas Services (MOGS), wants to inject capital into the institution.
The injection is dependent on the company getting approval from government to build a second fuel pipeline from Beira to Msasa in an investment worth close to $1 billion.
Executives from MOGS were in the country early this month and are expected soon to tie loose ends to the deal. MOGS have promised to inject $20 million into Trust less than a month after getting the go-ahead from government.
In a statement recently, Chikura had promised to pay Trust depositors up to the maximum insurable limit of $500 per depositor upon completion of a verification exercise.
Under the Deposit Protection Corporation Act Chapter 24:29, the DPC’s mandate has been expanded to involve the liquidation and curatorship of banks. The act enables them to look after the interests of the depositors under the Banking Act.
RBZ said the institution was undercapitalised with a core capital of $1,9 million and has been posting persistent losses since inception, amounting to $18,01 million.
Trust is now insisting the capitalisation deficiencies will be addressed once a new investor comes in.