Banks in race against time

Genesis Investment Bank and Royal Bank risked losing their operating licences if they failed to comply. Commercial banks are required to have a US$12,5 minimum capital.
Dr Gono said the banks that fail to meet the prescribed capital thresholds by March 31 would not be allowed to  continue in business..
“As monetary authorities, we wish to reiterate that as of April 1 2012, any banking institution that is not compliant with the minimum capital requirements shall not be allowed to conduct banking business.
“In this regard, banking institutions must finalise their recapitalisation initiatives, including consummation of mergers and acquisition transactions, by March 31 2012,” said Dr Gono in a statement.
Kingdom Bank, which was previously undercapitalised, is now in compliance with a capital base of US$15,6 million, following a fresh capital injection of US$9,5 million by AfrAsia Holdings Limited.
Renaissance Merchant Bank, which was recently, acquired by the National Social Security Authority now boasts a capital base of US$24 million
Dr Gono said ZABG Bank, which has a negative capital of US$15,35 million is finalising negotiations with two potential investors — Unicapital Finance of Mauritius, Swiss-based company AFG Global and a local company, Trebo & Khays (Private) Limited.
Genesis, with a negative capital base of US$3,2 million, is in talks with SwissCharge of Zambia and a consortium of local investors for an injection of US$20 million while Royal is pursuing mergers with two local banks with a combined capital of US$34 million.
In addition, the bank is also finalising an agreement with a local pension fund for equity participation of US$5 million. The recapitalisation initiatives should be concluded by March 29 2012.
Meanwhile, the liquidity situation is set to improve after banks committed to repatriate about US$200 million in nostro accounts.
Last month, Dr Gono directed all banks to maintain a maximum of 25 percent of their FCA balances in nostro accounts.
“This development should see banks being able to trade surplus funds in the interbank market, thereby alleviating the current liquidity situation in the economy,” said Dr Gono.