THE Bankers’ Association of Zimbabwe (BAZ) said there is need to set up a Special Purpose Vehicle (SPV) to address the issue of increased non-performing loans (NPLs).
Addressing the Parliamentary Portfolio Committee on Industry and Commerce on Monday, BAZ vice-president Sam Malaba said there was need for further consultations on the development of a holistic debt-resolution framework.
The official figures show that bad loans shot to 15,92 % for the year ended December 31 2013 from the 4% recorded in 2009 when the country adopted the multi-currency system.
“We also noted that there is need for more discussions with RBZ (Reserve Bank of Zimbabwe) on how to deal with the non-performing loans that are in the banking sector for us to have a holistic debt resolution framework to address NPLs,” Malaba said.
“We had proposed maybe an SPV could have been set up for that purpose in line with what happened when the CBZ nominees were set up, and also Climax was set up with regards to the RBZ.
“The SPV will take all the bad loans and try to sell them on the market. But for SPV to recover, the bank will give a discount on the value of the loan, for example if the loan will be for a $100 million SPV will get the loan at $60 million and will try to recover the full amount,” Malaba said.
He, however, said currently there was no targeted time frame on when the project would take off. According to the 2014 Monitory Policy Statement, RBZ acting governor Charity Dhliwayo said under capitalised banks were currently saddled with huge non-performing loans.
“In addition, the ever-greening of non-performing loans has resulted in the understatement of the level of provisions for bad and doubtful debts, thereby overstating the respective institutions’ earnings and capital positions,” Dhliwayo said.
Malaba challenged government to fulfil its mandate to recapitalise the RBZ to enable the central bank to resume its function as a lender of last resort to restore confidence in the banking sector.
He said the recapitalisation of RBZ would provide liquidity support to the financial sector to ensure that it effectively played its lender of last resort function and to rediscount market instruments when the need arises.
Since the country dollarised in 2009 the central bank has not played its role as a lender of last resort in the multicurrency system. Treasury has failed to provide funding to the central bank for it to perform the function.
The central bank requires between $150 — 200 million to get back on its feet.