RBZ closes two troubled banks
11/06/2012 00:00:00
by Business Reporter
THE central bank has closed Genesis Investment Bank and placed Interfin Bank
under curatorship for six months in a bid to prevent problems at the two
institutions triggering sector-wide contagion.
RBZ chief Gideon Gono said Monday Genesis Bank handed back its operating
licence after failing to meet the minimum capital requirements.
“Genesis Investment Bank resolved to voluntarily surrender the its banking
licence (after failing to) raise the requisite minimum capital from over 20
different potential inventors whom the bank tried to engage since 2009,”
Gono said.
“The Reserve Bank determined that the institution is not in a safe and sound
financial condition. The directors has failed to steer the institution out
of numerous deficiencies including gross undercapitalisation (-$3.20
million); persistent losses; poor asset quality; paltry deposit base; and
chronic liquidity challenges.
“As such, there is no prudential basis for the continued existence of the
bank.”
The RBZ has also been forced to take action over Interfin which struggled
with capitalisation challenges, non-performing loans as well as poor
management oversight.
Said Gono: “The unsafe and unsound condition of Interfin Bank Limited is
attributable to inadequate capitalisation, concentrated shareholding and
abuse of corporate structures, high level of non-performing insider and
related party exposures, chronic liquidity and income generation challenges,
poor board and senior management oversight, as well as violation of banking
laws and regulations.
Peter Bailey of KPMG Chartered Accountants has been appointed curator and
will recommend how to resolve the bank’s problems.
“The Reserve Bank of Zimbabwe has taken this action because it considers it
to be in the best interests of depositors and creditors, and of Interfin
Bank Limited itself and also of the banking sector in general,” Gono said.
Early this year the RBZ gave banks until April 1, 2012 to comply with new
minimum capital requirements and urged those struggling to consider merging
with other institutions.
“We urge those banking institutions without realistic chances of meeting the
soon to be increased minimum capital requirements to seriously consider
mergers and acquisitions or solemnize their proposed marriages,” Gono said
in February.
“As previously advised the undercapitalised banking institutions will have
up to 31 March 2012 to ensure compliance with the minimum capital
requirements.
“For the avoidance of doubt no undercapitalized banking institution will
remain operational in the banking sector with effect from 1 April 2012.”