Time Bank ushers in new business model

Local News

THE Reserve Bank of Zimbabwe (RBZ) has given Time Bank of Zimbabwe Limited (Time Bank) the greenlight to reopen, after its “unlawful closure” by the central bank in 2004.

In a notice this week, the RBZ notified the market of the impending comeback of Time Bank after 18 years.

“It is hereby notified that Time Bank of Zimbabwe Limited has been authorised to conduct limited banking activities in terms of the Banking Act (Chapter 24:20) following a pre-opening inspection of the institution’s readiness to commence banking business,” the RBZ said.

In this case, a pre-opening inspection is a rigorous exercise done by the regulator of ensuring that everything is in order before it is allowed to operate. A pre-opening inspection involves verifying the bank’s capital requirements and evaluating its executive and non-executive directors to ensure that they are fit to manage the financial institution.

“Having regard to the institution’s risk management structures and processes, level of capitalisation, corporate governance arrangements, its business plan and the Banking Act, Time Bank has been authorised to conduct limited banking activities and shall not be taking deposits from the public,” the RBZ added.

Time Bank’s return to the market is something to watch out for since the financial institution has been known for innovation and in this case, it has been authorised by the RBZ to operate a new business model whereby the bank will not start by taking deposits, as is usually done by commercial banks.

The bank will start by lending out to various categories of clients without taking deposits and then review the model at an appropriate time.

“We appreciate RBZ’s authorisation for Time Bank to re-commence banking activities. The business model of lending without taking deposits is Time Bank’s initiative which was approved by the RBZ as part of the pre-opening inspection.

“Such a business model was not imposed on us by RBZ. Time Bank will issue a public statement next week advising our date for starting such banking activities,” a Time Bank spokesperson said recently.

This does not come as a surprise since the bank announced last year, before the pre-opening inspection, that under its business plan, it will begin by lending without taking deposits.

In a statement issued at the time, the Chris Takura Tande-led institution will be introducing four new loan facilities, namely mortgage loans, loan facilities for exporters, loans for the payment of compensation to both previous farm-owners (PFOs) and other groups of Zimbabweans who also deserve compensation.

Most of the new loan facilities will be structured in an innovative way. However, Time Bank could not introduce such loan facilities before it had been authorised by the RBZ to operate.

Time Bank has said it would focus on investment banking activities.

Founded by Takura-Tande, Time Bank began operations in 1997, becoming the first locally owned indigenous commercial bank. Other locally-owned merchant banks and discount houses were to follow years later into commercial banking. Time Bank was closed in 2004 and its licence was cancelled in 2006 by the central bank.

Time Bank disputed the reasons for its closure and cancellation of licence and was the first bank to take RBZ to court.

The protracted legal battle unearthed that the bank was owed US$5 million by the RBZ before its closure.

The then RBZ governor Leonard Tsumba agreed to refund the money to Time Bank but his term of office ended before the funds could be paid.

His successor Gideon Gono was accused of having reneged in refunding the money, which forced Time Bank to approach the courts.

After the cancellation of its licence, the RBZ tried to put Time Bank into ZABG, but the bank objected strongly.

After the end of curatorship, Time Bank under its director, is probably the only bank in the banking history of Zimbabwe that in 2006 and 2007 paid all its depositors and its staff members full salaries and terminal benefits without borrowing from the RBZ or without new money from its shareholders or the Deposit Protection Corporation (DPC).

The courts reinstated the licence of Time Bank in 2009 but the bank could not operate, as RBZ could not do a handover of the assets, documents and affairs of Time Bank in the normal way at the end of curatorship, from the former curator to the bank’s directors.

In 2015, RBZ governor John Mangudya, resolved all the disputes between RBZ and Time Bank by entering a settlement agreement, under which the RBZ agreed to refund Time Bank the US$5 million. The apex bank also agreed on the issue of the outstanding handover/takeover as well as the reopening of Time Bank, subject to pre-opening inspection. This showed that the bank had enough financial resources before it was closed.

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