adminIn a recent presentation on the measures to improve liquidity in the economy, Reserve Bank of Zimbabwe Governor Dr Gideon Gono said undercapitalised banking institutions would have up to the end of the month to comply with the minimum threshold.
“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 undercapitalised banking institution will remain operational in the banking sector with effect from 1 April 2012,” said Dr Gono in his presentation.
In separate interviews, economic commentators said mergers with foreign investors were a positive development as capital would be raised for them to remain operational.
They said if the banks remained operational, it would create confidence in the financial sector.
Some of the troubled financial institutions include Royal, Genesis Merchant Bank and ZABG.
Royal Bank chief executive Mr Jeffrey Mzwimbi has said they have found a new investor and the deal was being reviewed by the central bank.
Kingdom Financial Holdings Limited recently concluded an agreement with AfrAsia Bank Limited which injected $9,5 million and made it possible for the institution to meet its minimum capital requirements.
“By merging with foreign investors local institutions will bring back confidence in the sector. If the money to be invested by the foreign investors is to circulate in the economy and loaned out to business that will stimulate production by local industries,” said the Bulawayo Indigenous Business Association vice president Mrs Violet Mhute.
She sad it was imperative for the monetary authorities to ensure that as the troubled institutions resort to mergers and acquisitions with foreign investors, the capital being invested would not be externalised so that the sector becomes robust and improve liquidity on the market.
An economist, Mr Takunda Mugaga, said: “What the Zimbabwe market is void of at the moment is foreign direct investment. The coming in of foreign investors to partner local financial institutions is a welcome development expected to improve liquidity in the economy and boost banking sector confidence.”
Another economic commentator Mr Peter Mhaka said the mergers and acquisitions should not just be for recapitalisation to fulfil the banks’ minimum threshold.
“The mergers and acquisitions should have an approach to thrive on business,” he said.
The central bank requires that commercial banks should have minimum capital requirements of $12,5 million while merchant banks and building societies should have $10 million.
Asset management companies are required to raise a minimum capital of $2,5 million while finance and discount houses are each required to have at least $7,5 million.
A total of 26 operational banks including POSB, 16 asset management companies and 157 microfinance institutions were under the supervision of RBZ as at the end of last year.
Online Reporter