DISTRESSED National Discount House (NDH) has been handed a reprieve by Zimbabwe’s central bank, as it now looks set to escape mandatory closure because it has taken “demo
nstrable corrective measures” to come out of the doldrums.
The amnesty comes hard on the heels of at least seven harsh interventions at banks in equally bad financial positions. The reprieve was confirmed this week by a Reserve Bank of Zimbabwe (RBZ) spokeswoman.
Despite admissions that NDH was “still far from the peril” of liquidity-linked commercial ruins, she said the bank’s intended consolidation into First Bank Corporation (FBC) Holdings Ltd was positive and sufficient enough to warrant the bank’s placement under curatorship.
The central bank, a confirmed equity holder in NDH following the conversion of its $6 billion Troubled Bank Fund debt and on the back of nasty similar partitioning acts by incensed depositors, also argues that the lower-margin bank is “still solvent” to face the potential wrack of state intervention.
Said the RBZ spokesperson: “The negotiations (NDH’s) have been centred on a scheme of arrangement with other stakeholders designed to resolve the current challenges.”
“It is, therefore, in view of the significant progress that has been made in this direction, that RBZ considered it premature to place the institution under curatorship.”
Should it manage to be incorporated into FBC Holdings, NDH will join Southern African Re-Insurance under the FBC umbrella.
NDH, battling liquidity problems for months, has seen founding shareholders being thrown out and its survival card now rests with the monetary authorities’ benevolent extension of time to explore the forced merger route.
“NDH has not been placed under curatorship to provide ample time for current initiatives to be finalised.
“The decision to place a bank under curatorship is taken after it has been determined that there is no other approach that can resolve the challenges facing the bank,” she said.
NDH is now under the management of a committee of depositors headed by prominent lawyer Edwin Manikai. The depositors took over the company after it failed to pay its maturities. The committee is now negotiating with FBCH for the pending takeover expected soon.