adminThe Reserve Bank of Zimbabwe recently increased the minimum capital requirements for commercial banks and merchant banks to $100 million from $12,5 million and $10 million respectively.
Building society thresholds have been set at $80 million from $10 million while new discount and finance house capital requirements have been pegged at $60 million, up from $7,5 million.
Micro-finance institutions on the other hand will have to raise their capital to $4 million from the current $1 million.
In its monthly economic review for August, the AfDB said the new requirements could trigger uncompetitiveness in the sector.
“The RBZ advocates for mergers and or acquisitions by healthy banks of banking institutions with unrealistic chances of meeting the required minimum capital thresholds,” AfDB said.
“However, this has challenges that include increased market concentration, which may promote uncompetitive behaviour among the fewer resultant banks, difficulty in reconciling different organisational cultures and laying-off of employees.”
The AfDB said banks, especially indigenous ones, were likely to struggle to raise the new capital.
The AfDB cited poor bank performance, weak investor confidence and poor corporate governance as factors likely to make investors reluctant to inject new capital.
The previous capital requirements resulted in Genesis Bank and Royal Bank surrendering their licences after failing to meet the set minimum thresholds.
However, RBZ governor Dr Gideon Gono argues that the move was aimed at nurturing a more stable financial system. — New Ziana.
Online Reporter