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Gono cracks whip on banks

Gono berated some banking institutions that were bringing in fictitious equity partners to the Reserve Bank, to buy time.

Since the use of multi-currencies in 2009, some banks and asset managers have struggled to be capital compliant. Only NDH was bold enough to surrender its licence after its recapitalisation plans hit the brick wall.

In a monetary policy statement on Friday, Gono said despite various regulatory extensions on capitalisation deadlines and numerous calls for market oriented solutions including mergers and acquisitions “a few banking institutions are not yet in compliance with capital requirements”.

Gono said out of the six non-compliant banks, RBZ had granted a special dispensation to Kingdom, Royal and ZABG by extending the deadline.

He said RBZ was going to meet all undercapitalised banking institutions, together with their boards and shareholders, to determine the way forward on a case by case basis.

Gono said Kingdom, which had a capital position of US$2,79 million as at June 30 against the minimum of US$12,5 million, had been given up to February 7 2012 to be capital compliant.

The bank intends to raise US$15 million from existing shareholders through a rights issue and private placement by October 31 2011.

Up until its demerger from Meikles last year, Kingdom was compliant with the minimum capital requirements.

Royal Bank had US$1,01 million by June 30 and was given up to September 30 2012.

The bank is currently negotiating with three potential investors to raise US$11 million by September 30 this year.

Royal was unbundled from the Zimbabwe Allied Banking Group (ZABG) last year.

ZABG had been formed through an amalgamation of Royal, Trust and Barbican. Trust reopened last year and has already met the requirements while Barbican is set to reopen.

ZABG, with negative capital of US$$14,39 million, was given up to September 30 2012 to be capital compliant.

The move would facilitate the coming on board of a potential investor who wants to snap up 60% shareholding. A due diligence has been conducted and negotiations are in progress.

ZABG was left with few assets after Trust, Royal and Barbican reclaimed their assets.

Gono said Genesis Investment Bank is critically under-capitalised with negative capital of US$525 537,11 as at June 30 2011.

“Previous capital raising initiatives with foreign investors were not successful. The bank is, however, pursuing discussions with various potential local investors,” Gono said.
Gono said Ecobank Zimbabwe was in the process of regularising its capital position.

“As at 30 June 2011, Ecobank Zimbabwe had a core capital of US$8 716 234,79 which is below the prescribed minimum capital requirement of US$10 million for merchant banks. The bank is in the process of regularising its capital position,” Gono said.

The other undercapitalised bank, ReNaissance Merchant Bank, is under curatorship and its fate would be determined by the curator Reggie Saruchera. The troubled bank had a negative capital of US$16 million as at April 30.

He said banking institutions should not “mistake the Reserve Bank’s extension of the recapitalisation deadlines to facilitate materialisation recapitalisation initiatives as indulgence regulatory forbearance”.

There are 26 operating banking institutions made up of 17 commercial banks, four merchant banks, four building societies and one savings bank.
There are 16 asset management companies and 132 microfinance institutions.

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