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New shareholding threshold for banks

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THE Reserve Bank of Zimbabwe (RBZ) is putting a new shareholding threshold where individuals can only own up to 10% in a banking institution as part of a roadmap to attain corporate governance, RBZ deputy governor Charity Dhliwayo has said.

BY TARISAI MANDIZHA

The measure is contained in the amendments to the Banking Act which come following bank closures with shareholders and senior management being accused of looting depositors’ funds.

Dhliwayo said the government was in the process of amending the Banking Act to reduce bank failures in the country saying that with the new Act individuals will only be allowed to hold up to 10% shareholding in a bank and companies can only hold 25% while registered and well-established companies can hold up to 65% shareholding.

“We are limiting the shareholding of individuals in owning a bank. With the new Banking Act individuals can hold up to 10% of the share of a banking institution and companies to hold 25% of the shares,” Dhliwayo said.

“It’s being drafted and it’s not yet final, but the area of shareholding is being looked at very seriously.”

She said the RBZ was enforcing a raft of measures to minimise bank failures in the country.

Dhliwayo said the Banking Act was being drafted at the Attorney-General’s Office and once the Bill was out, consultative forums would be held so members of the public and the banking sector would have a chance to input their comments.

“You can’t stop bank failures as such, but I think the measures we are taking will reduce banking failures. We are currently amending the Banking Act. The major areas we are reviewing are corporate governance. Much of the bank failures we are witnessing are due to poor corporate governance on non-performing insider loans, which means that the owners, the directors and some senior managers take loans which will end up as non- performing.

“So corporate governance is something we are taking into consideration to make sure it is done at arm’s length,” Dhliwayo said.

Dhliwayo said when a bank fails, depositors suffer although they might get some of their money but at some point might not get all of it.

She said amending the legislation would deal with such issues to minimise bank failures and if a bank’s failure was as a result of careless managers then they should be punished.

She added that RBZ was also strengthening consolidated supervising of banks and their subsidiaries or other entities which would be linked to the banking institutions in Zimbabwe for monitoring purposes.

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