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Molline Gagare Business Reporter
THE Reserve Bank of Zimbabwe says ailing Metbank is on the recovery path after increasing its minimum core capital to $31 million, surpassing the $25 million minimum requirement for banks under tier two.
Central Bank governor, John Mangudya commended the improvement, which he said came as a result of adoption of certain measures aimed at strengthening the bank’s capital and liquidity position.
Metbank has been identified as one of the institutions facing capital and liquidity problems early this year after it emerged that it was struggling to offer basic services such as withdrawals.
“These measures, which included strategic realignment, balance sheet restructuring, liquidity mobilisation and cost containment strategies, contributed to the bank’s core capital position to $31 million as at March 2015, which is now above the minimum core capital requirement of $25 million for tier two banks,” said Mangudya.
“The liquidity position has been enhanced through structuring of liabilities of large creditors and discounting of borrowers receivables. These efforts have enabled the settlement of small depositors who are now being serviced normally.
“The bank’s financial condition and the re-alignment towards the property development banking model is envisaged to further improve the institution’s intermediation capacity.”
The RBZ governor said credit risk as reflected by the high level of non-performing loans, and liquidity constraints has been the most significant risk confronting the banking sector hence the establishment of strategic institutions to enhance liquidity in the sector.
“Against this background, the Reserve Bank established the Zimbabwe Asset Management Corporation (Zamco) to cleanse the banks’ balance sheets of toxic non-performing loans assets. Further, the Reserve Bank has made progress in the establishment of a Credit Reference System in order to address information asymmetry challenges and promote good credit in the market,” said Mangudya.
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