THE National Social Security Authority (NSSA) is working on a rescue plan for banking institutions it has interest in ahead of the phased Reserve Bank of Zimbabwe (RBZ) minimum capital requirements deadlines.
Report by Ndamu Sandu
According to RBZ, new capital thresholds for commercial and merchant banks are supposed to have a minimum capital of US$100 million by June 2014.
In the first phase, they are supposed to have minimum capital of US$25 million by December 31, US$50 million by June 30 next year, US$75 million by December 2013.
James Matiza, NSSA general manager told Standardbusiness last week the authority had engaged Deloitte & Touche to collect information on how banks where it has shareholding, intended to capitalise and meet the RBZ deadlines.
The accounting firm starts work tomorrow and is supposed to complete the exercise in two weeks.
Matiza said the report would then be tabled to the full NSSA board to determine the way forward.
He said while banks had come up with measures on how they would comply during the first phase of the recapitalisation deadline, they still needed to comply with three more deadlines.
“Even if they [the banks] say they are okay, the study will give information on how they can raise capital for the next three tranches required,” he said.
NSSA has 26,6% in FBC Holdings, the parent company of FBC Bank and 37,9% shareholding in ZB Financial Holdings that wholly owns FBC Bank. The authority also has 84% in Capital Bank, formerly ReNaissance Merchant Bank and 10% in CBZ Holdings.
FBC and ZB have already announced that it would merge its building and commercial banking units to raise more capital.
CBZ has already surpassed the June 2014 deadline.
Matiza said engaging a consultant on the way forward for its investments was motivated by the need to have a back-up plan as the pay-as-you-go pension scheme “does not have enough money to spread throughout the banks”.
Banking institutions with higher capital levels, such as CBZ Bank and Standard Chartered Bank, revealed demonstrable ability to generate revenues in excess of their operating costs.
Gono said banking institutions with low capital levels reported higher incidences of losses.
“A low capital base restricts a banking institution’s capacity to underwrite sufficient business and generate enough revenues to meet its operational costs,” Gono said.
“The higher the capital base, the greater the loss absorption capacity and therefore the resilience of the institution to adverse endogenous and exogenous shocks.”