HomeBusinessIlliquid market impedes AfrAsia loan repayments

Illiquid market impedes AfrAsia loan repayments


THE Deposit Protection Corporation (DPC) says liquidity challenges have led to AfrAsia Bank Zimbabwe debtors finding it difficult to repay their loans, thereby, impeding liquidation disbursements.


This comes as to date, $1,9 million out of the insured $3,4m has been paid to AfrAsia Bank depositors, while $2,9m had been paid to preferred creditors as dividends.

AfrAsia Bank Zimbabwe surrendered its operating licence in February 2015.

In emailed responses to NewsDay on Friday, DPC said in bank liquidations, the dividend paid to creditors ultimately depended on loan recoveries and realisation of available assets.

“In the current economic environment, debtors are finding it difficult to repay their loans for various reasons including liquidity challenges,” DPC said.

“Take note that to date about $1,9m out of the insured amount of $3,4m has been paid out to depositors of AfrAsia Bank with balances equal to or less than $500. A total of $2,9m has been paid out to preferred creditors of the bank as dividends. The Master of High Court has provisionally accepted claims against the bank valued at about $61m.”

Last week, AfrAsia Bank’s liquidator, Reggie Saruchera, said the illiquid market had caused delays in liquidation disbursements.

The third interim dividend is expected to be paid in the first half of the year to concurrent creditors, after preferred creditors had been paid and will be distributed on the rate of recovery and disposal of assets.

The second interim dividend was paid to preferred creditors last November.

As part of AfrAsia Bank liquidation, a double-storied administration block, with six offices, boardroom, and banking hall was recently placed on the Hammer and Tongues auction website.

However, the illiquid market has put challenges on the realisation of funds from the disposal of the AfrAsia Bank’s assets through public auctions.

DPC said this could result in low recoveries and, thus, low dividends to creditors.

“In liquidation, dividends to creditors are not guaranteed as much depends on the rate of recoveries from debtors and asset disposals through public auctions,” DPC said.

“This said, the liquidator and other stakeholders are actively pursuing any official or past official of the failed banking institutions, who is or appears to be personally liable to pay damages or compensation to the bank or is personally liable for any liabilities of the bank. Such endeavours will enhance the compensation available to the creditors.”

To mitigate the challenges of the illiquid market affecting liquidation distributions, alternative forms of payment other than cash from debtors had been adopted.

These include properties and Treasury Bills.

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