Mixed reactions to bank capitalisation

Reserve Bank of Zimbabwe Governor Dr Gideon Gono hinted on increasing the minimum capital thresholds of banks when he presents his Mid-Term Monetary Policy Review Statement at the end of this month.
Currently, the minimum capital requirement for commercial banks is US$12, 5 million while that of merchant banks is US$10 million.
Bankers’ Association of Zimbabwe president Mr George Guvamatanga said the increase would go a long way in strengthening banking institutions.
“Banks drive economic growth and higher capitalisation would mean that they are stronger institutions.
“This is exactly what our economy needs going forward as they will have improved capacity to finance business,” he said.
While the increase is imminent, the ability of local banks to meet the new thresholds remains questionable as many of them struggled to meet the deadline for the last review.
Economic analyst Mr John Robertson said the smaller banks would struggle to meet the new thresholds.
“It is important that the banks meet the required threshold but the smaller banks might struggle.
“An increase would mean that the smaller banks might have to merge to meet the requirements”.
“We have too many undependable small banks operating in uncertainty; it is better that we have a few well-financed banks”, he said.
Some analysts, however, think the current thresholds are appropriate and an increase would only result in banks hiking charges in order to meet the new threshold.
Early this month Genesis Bank voluntarily surrendered its banking licence to the Reserve Bank of Zimbabwe after failing to meet the minimum capital requirements. — New Ziana.