admin
Harare Bureau
ALLIED Bank is considering recapitalising through a placement of shares to potential investors, failure of which it will downgrade its banking licence to a deposit taking micro-finance institution.“The bank will flight a public notice inviting investors willing to inject fresh capital into the bank for some shares and this should be done in the next few weeks,” a source familiar with the development said on Friday.
“If that fails to bear positive results, the bank will downgrade its banking licence to deposit taking micro finance.”
Allied Bank chairman Farai Mtamgamira could not be reached for comment yesterday while chief executive Steven Gwasira did not return a call seeking comment.
The Reserve Bank of Zimbabwe gave the financial institutions up to December 2020 to be compliant with the set minimum capital requirements but should submit their plans on how they intend to do so by June this year.
Commercial banks and building societies will be required to have minimum capital of $100 million. Deposit taking micro finance institutions will be required to have a minimum capital of $20 million.
Central bank acting governor Dr Charity Dhliwayo recently advised struggling banks to downgrade and obtain deposit taking micro-finance licences.
Capital Bank, which is owned by the National Social Security Authority has since surrendered its merchant banking licence and is seeking a deposit micro finance licence.
Local banks, particularly those owned by indigenous Zimbabwe have been struggling to raise capital due to the prevailing liquidity constraints. There is also low investment appetite among foreigners mainly due to the perceived country risk profile.
The financial institutions were required to be complaint by June this year but the deadline was moved to December 2020 in light of the country’s macro-economic challenges.
Ex-RBZ governor Dr Gideon Gono had raised minimum thresholds for commercial and merchant banks to $100 million from $12,5 million and $10 million respectively in June 2012.
Full compliance was set for June 2014 with banks required to meet 25 percent of the new thresholds by December 2012, 50 percent by June 2013 and 75 percent by end December 2013.
But banks have always expressed reservations about the levels insisting the thresholds were too high for an economy reeling from a suffocating liquidity crisis.
Online Reporter