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Business Reporter
Troubled banking group, Interfin Financial Services Limited is applying for writs of execution against property offered as security for loans in a bid to recover monies owed to the group, sources told The Herald Business.The sources, however, said that a bigger chunk of the loans issued out by the bank are irrecoverable as most of them were insider loans to bank executives through proxies.
“The group is far from recuperating from the collapse of its flagship banking unit, Interfin Banking Corporation, as the situation at the banking arm is far from being resolved despite talks with a potential investor.
“The company has resorted to follow a legal route of trying to get writs of execution against property pledged as security,” the sources said.
IFSL which has been under curatorship since June 2012 is engaged in negotiations with a potential investor who is currently conducting due diligence with the hope of injecting about $50 million to recapitalise the bank.
“Even with 100 percent recovery of all those loans, the bank still can’t meet the new capital adequacy thresholds as required by the RBZ statutes,” the source said.
Judgments to recover nearly $64 million have been obtained from the courts while provisional sentences to the tune of $16 million have been issued.
Summons worth $3,2 million were suspended while a debt of $512 000 has been repaid.
Judgments are pending in cases in which the bank is pursing $23 million from debtors while it owes its depositors about $70 million.
“Even when the bank starts afresh, the high risk tag already attached to it owing to past financial trepidations will seriously limit its capacity to attract business. Worse, in what operational format and market niche will it try to reincarnate? Merchant banking, discount house or retail banking?” the source said.
IFSL chairman Mr Timothy Chiganze yesterday confirmed to The Herald Business that the company is engaging a potential investor.
“I can confirm that a potential investor is currently conducting due diligence with the intention of investing in the group,” said Mr Chiganze.
Interfin Banking Corporation was placed under curatorship after the Reserve Bank of Zimbabwe (RBZ) discovered violation of banking laws, low capitalisation, concentrated shareholding and abuse of corporate structures, high levels of non-performing insider and related-party exposure, a chronic liquidity position and income generation challenges.
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