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Tetrad under judicial management

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TETRAD Investment Bank Limited has been placed under provisional judicial management by the High Court of Zimbabwe effective last Thursday to safeguard the interests of depositors and creditors.

BY TARISAI MANDIZHA

Judicial management is essentially a process that gives prime consideration to rescuing distressed companies as a going concern through the formulation and implementation of a reconstruction plan.

In a notice of order for provisional judicial management yesterday, Tetrad said the action was meant to safeguard the interests of depositors and creditors.

“Creditors are hereby advised that on January 29 2015, the bank was placed under provisional Judicial Management by the High Court of Zimbabwe, in order to safeguard the interests of depositors and creditors alike in respect of the preservation of the bank’s assets.

“The Reserve Bank of Zimbabwe was informed of this intended action and the reasons thereof, particularly in light of the fact that the scheme to which the bank had been subject to was due for determination on January 31 2015,” reads the notice.

According to the notice, the Provisional Judicial Management Order effectively substitutes the intent and purpose of the scheme in so far as it relates to the conclusion of the investment transaction with Horizon’s Capital Consortium Holdings Private Limited, which continued negotiations with the government of Zimbabwe.

“The order provides for a continued stay on all actions, applications, writs, summons and other processes against the bank as previously provided under the scheme. The statutory notice regarding this development will be published in the Government Gazette and national press shortly,” reads the notice.

In August, Tetrad creditors voted for the scheme meeting that agreed to defer claims until October 31 to allow processes to recapitalise the institution.

The creditors further agreed on January 31 2015 to allow Russian investor Horizon Capital to finalise acquisition of a controlling stake in the bank.
Before the scheme meeting, creditors had obtained writs of execution to attach the bank’s assets.

Tetrad Investment Bank was born out of Tetrad Securities Limited, Zimbabwe’s largest discount house registered in 1996.

In 2009 Tetrad Securities Limited was granted a merchant banking licence by the Reserve Bank and became Tetrad Investment Bank.

Capital requirements for commercial and merchant banks remain at $25 million, while that for building societies stands at$20 million and $15 million for discount and finance houses.

Commercial and merchant banks are expected to reach $100 million minimum capital requirements by 2020.

In his maiden monetary policy statement, RBZ governor John Mangudya said Tetrad, alongside MetBank, Allied Bank and AfrAsia Bank, were facing solvency challenges due to liquidity, macro and institution-specific challenges.

He said the distressed banks commanded low market share in terms of loans (8,8%), assets (7,2%) and deposits (6,7%) as at June 30 2014.

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