RBZ monitors seven troubled banks


The Reserve Bank of Zimbabwe has placed seven troubled banks under surveillance amid concerns that the financial institutions could be facing insolvency problems, NewsDay can reveal.

By Bernard Mpofu
Acting Business Editor

The revelation comes a few weeks after former Finance minister Tendai Biti said liquidity constraints which hit the market during the just-ended festive season was triggered by under-capitalised financial institutions.

According to a confidential central bank document seen by this paper, as at September 2013, a total of 14 out of 21 operating banking institutions (excluding POSB), were in compliance with the December 2012 minimum capital requirements of $25 million.

“Seven banking institutions continue to be monitored under the Troubled and Insolvent Bank Policy. Trust Bank, Allied and MetBank continue to face mounting liquidity challenges,” reads the report dated November 15, 2013.

In 2012, the central bank announced an eight-fold increase in minimum capital requirements for commercial banks to $100 million.

The staggered capitalisation exercise is expected to be completed this year.

As at September 30, 2013, the seven banks — Allied ($11,98 million); Agribank ($16,62 million); Capital ($18 million); Kingdom ($7,94 million); Tetrad ($8,42 million); Trust ($2,55 million) and ZB Building Society ($16,02 million) had not complied with December 2012 threshold. On the contrary, CBZ, according to the documents, was the most capitalised bank with a core capital of $127,14 million followed by CABS on $64,62 million.

The troubled banking institutions’ total assets, total deposits and total loans amounted to $755,64 million, $456,24 million and $481,62 million as at September 2013, accounting for 11,43%, 12,09% and 12,75% of the banking sector’s total assets, total deposits and total loans respectively.

A total of 15 operating banks (excluding POSB), the central bank report further reads, recorded profits for the nine months ended September 2013.

“The majority of locally-owned banks recorded marginal profits or losses, while all foreign-owned banks posted profits. Generally, banks that recorded losses lacked critical mass to generate sufficient revenue to cover operating costs,” the report reads.

The apex bank said banking sector average ratio of non-performing loans to total loans increased to 15,64% during the period under review from 14,51% as at June 30, 2013. The central bank, however, said, if the seven troubled banks are excluded, the ratio falls to 9,07%. The central bank also warned that going forward, if the overall economic performance remains sluggish, the high levels of NPLs being currently recorded are likely to persist.

“Banking institutions worst affected by increasing NPLs such as Capital Bank, Kingdom Bank, Allied Bank and Tetrad have instituted various measures to manage the high NPLs such as curtailing lending activities and focusing on recovery efforts. The reduction in lending has, however, impacted on the earnings as reflected by the losses reported by these banks.”

Across the sector, Steward Bank experienced the highest operating loss of $31,31 million for the nine months to September weighed down by non-recurring operating expenditure incurred during the business model re-alignment. Impairment of legacy non-performing loans and advances, the report further showed, also affected the bank’s profitability.

The year, however, closed with some banks embarking on a flurry of capital-raising initiatives to meet the central bank thresholds. Last week Afrasia Zimbabwe Limited (formerly Kingdom Bank) announced that it had completed the phase of raising $20 million capital out of the targeted $100 required to fully capitalise the bank.

Banks have been gagged from disclosing their capital levels to the public following a directive from former RBZ governor Gideon Gono.

“Non-compliant banks are taking various measures to regularise their capital positions which are at different stages of implementation,” the document further reads.


  1. If these banks were to combine would it make any difference. I do not underrstand how banks can be asked to capitalise to $100 million, from 25million. At some of the capitalisations shown above, I believe they even failed to reach the previous minimum requirements. Is this a policy move to eradicate indegenous banks by the government

    • We need first to understand the basics of the banking functionality before we open out and post our little knowledge about it. the purpose of having these capitalization limits is to protect the innocent stakeholders chief among them the Depositor. in the event of dissolution/liquidation/insolvency or whatever challenge the bank will have a sound financial position to settle its liabilities without necessarily prejudicing the innocent stakeholders. its a sound policy in my own opinion as a depositor

  2. If we were to look at the people taking some of the loans, I guess the loss of $31.31 million made by Steward Bank is not genuine. Is this reckless lending in the aftermath of the GFC onset. I thought there were laws that put managers, directors and bank owners behind bars for endangerement of public deposits. I sincerely believe that most of the money can sincerely be recovered from loan takers. Otherwise there would be abundant evidence that these loans were recklessly made and documentation destroyed. I wonder why there is a cash crisis in Zimbabwe and lack of depositor confidence. These financially servy people connived to create a mini tsunami GFC in Zimbabwe. Wicked Wicked people. Mapurisa aripi. Wakaona mapurisa achitungamirirwa na Chihuri tsotsi zvaro kana forensics dzacho dzingashande. Hopeless godless zimbabweans. Our destiny is hell

    • @ muporifita Jeremiah Clearly you have not read and understood the article. The loss that steward bank incurred is in relation to business model re-alignment processes that resulted in a non recurring expenditure. Please comment when u have understood the isuues under discusiion.

  3. the minimum requirements is too heavy for all locally owned banks worst still in this US Dollar era,vana stanbic,barclays and stanchart ndivo vega vanotorarrama.why not set minimum that is different from foreign banks if they want to preserve indigenous products

    • I agree Observer, while it may be a noble initiative to have commercial banks capitalized to the tune of $100million, I think the RBZ needs to consider the practicality of that requirement, unless they want to have just a few banks running the whole economy, in which case many of the local banks would then have their commercial licences withdrawn or otherwise merge with other local banks to meet the capital requirements.

      • @ Mhof and Observer the reserve bank is trying to protect you the depositor by introducing the so-called “high capital requirements”. I think RBZ should be applauded for its efforts for trying to bring sanity to the banking industry. Those banks that do not meet the capitalization requirement may consider mergers.

        • …also, there is no limit as to the number of investors a bank can have, hence if you cant afford the minimum capital, seek investors, big and small. Problem ndeyekuomera ne equity usina mari like zvaiita Chankaira, chionai manje kingdom ichisimuka zvaabuda

  4. The high capital requirements are actually a good move as it will prohibit arbitrary profiteering entrepreneurship in the banking sector and leave banking strictly for banking-minded people like the few foreign-owned banks that over the years have remained trustworthy where our indigenous friends were fueling economic collapse and instability. If these banks merge, they will be more efficient, have a larger pool of depositors, etc.

  5. Guys these locally owned banks have no control from the top. The top guys just dip their hands into depositors’ moneys at will that is why we have such problems. Just check what they ake home from the banks. They are using the banks to loot money from unsuspecting depositors. For a start can RBZ first of all look at the salaries and perks of the top guys of these banks, and then look at underhand dealings by these banks’ staff. Many of these banks have staff who have briefcase companies and sell products to the bank at inflated prices using their own companies. So the banks are bleeding.

  6. Seriously we need banks that are capitalised to even more than $200million by yesterday. I mean this is not musika where you have a bunch of tomatoes and onions zvakasatengwa ozviona mangwana. Imagine going to a bank and told to a maximum withdrawal of $50 only. Banks are money creators remember

  7. indeed depositor confidence can b available if a bank can comply with local requirements. thumps up to RBZ ex governor. local banks need no exception let them comply and we can be safe as depositors

  8. It is a pity that as Zimbabweans we still look down upon others. When will we learn to respect other people’s comments and debate constructively?

    My opinion is as follows:

    1) I do not agree with the fact that the minimum capital requirements should be raised to 100 Million, in as much as capital cushions the bank in time of crises but due to inappropriate economic policies that we currently have I am not sure if it is feasible. Take for instance, Indigenous banks if they are to look for foreign investors it will take a while before an agreement can be reached to channel the funds in the bank. Negotiations do not happen over night and hence the 100 million deadlines are unrealistic to me. More so, the current performance of banks and the unsound Indigenization policy in Zimbabwe is not that lucrative that a foreign investor would want channel funds in banks.

    2) Raising the minimum capital to 100 million will give the banks more leverage to diverge from the core banking activities and engage in speculative binges which is against the banking act (24.20)

    3) It might sound as if it is a good idea of reforming the banking sector and having stability in the banking system but I am quite certain that most banks are not ready for that. I am sure the Implementation of such capital levels is in tandem with the requirements of Basel III but banks are not ready. We will need more realistic time frames like 5-10 years to achieve such.

    4) My advise to those in central bank, do not rush into implementing policies that you have no idea of. Try to look closely and strategize on the best possible solutions to dodge ahead. Do not rely too much on bookish economics look for real practical solutions to the real life problems. I am saying this because, we have seen the so called ”troubled banks” coming back into play with the same directors that you once named not competent to run the banks. You allowed these banks to fail twice. In your right senses, how can you allow banks to fail twice? What signal are you trying to send to the depositors?Through your onsite and offsite supervisions you knew that these banks were financially unsound and they did not have adequate capital and hence you proceeded to issue licences to these banks? Why? You do not disclose this information to the general public and hence they are the depositors who will have their money locked up in these banks. Whose interests do you have at heart? Is your role not to promote a safe and sound banking practice? For how long should depositors continue to suffer due to your negligence?

    5) Beware of the too big to fail case with CBZ. I am quite certain that with the activities that that bank is performing they deserve to hold more than the stipulated 100 million capital.

    6) why not use your economic capital modelling techniques to determine what levels of capital a bank should hold rather than just giving a thumb suck figure.

    7) Finally the Depositors Protection Scheme is absolutely a dead organisation. I am not sure if those guys too know what they are doing? They need a wake up call.

    Thank you.

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