GOVERNMENT and the National Social Security Authority (NSSA) could fail to inject fresh capital into Zimbabwe Financial Holdings Ltd (Finhold) under a pl
anned trillion dollar rights issue that could become the biggest cash-raising exercise on the local bourse, businessdigest established this week.
Government’s inability to raise cash for the financial group, together with threats of bank failures due to high statutory reserve ratios, might have prompted a spate of concessions to the banking sector by Reserve Bank of Zimbabwe governor Gideon Gono.
Although one source said there were still “high level discussions” on Finhold’s planned rights issue, another source indicated that government and NSSA, both major shareholders in Finhold, had turned down a request for cash injections meant to increase capital levels for subsidiary institutions to levels prescribed by the RBZ earlier this year.
Although businessdigest could not establish how much Finhold intended to raise under the programme, reports have suggested the group wanted to mobilise $3 trillion from shareholders for fresh capital.
Both government and NSSA, a compulsory national pension scheme considered a bottomless cash pit, are said to be strapped for cash and therefore unable to commit funds towards recapitalisation of the group.
NSSA, sources indicated, was committing huge sums of money in government-sanctioned projects and could not raise the amount required by Finhold even after recently increasing thresholds for pension contributions and in the process guaranteeing a monthly inflow of over $1 trillion.
NSSA, the largest shareholder in Finhold, holds 46% of the group’s issued share capital, with government holding 29% as the second largest shareholder.
NSSA would pump out $1,38 trillion for its stake if Finhold undertakes a $3 trillion rights issue, while government, projected to suffer a $253 trillion budget deficit this year, would inject $870 billion.
Finhold’s subsidiaries are Zimbabwe Banking Corporation Ltd, whose operational divisions are commercial bank Zimbank and Syfrets Corporate and Merchant Bank, and ZB Holdings, whose operational divisions include Syfam, an asset management firm, and Continental Capital, a venture capital company.
Finhold chief executive officer, Elisha Mushayakarara, was not available for comment as he was said to be in meetings.
Group spokesman, Joseph Muzulu, said he had not yet been informed about any failure by government or NSSA to participate in the rights issue. “It’s coming, but I’m not sure when,” said Muzulu about the rights issue.
NSSA general manager Amod Takawira could not be contacted for comment as he was reportedly busy in meetings.
Gono announced during his monetary policy statement on Monday that financial institutions still had to match capital levels equivalent to US$10 million by September 30 but at the old exchange rate of $101 000 to the US dollar.
Gono told bankers at a meeting two weeks ago that they were no longer compelled to adjust their capital levels with every devaluation of the local currency, suggesting a shift in the January policy announcement.