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Business Editor
The Reserve Bank of Zimbabwe applied to the High Court for Interfin Bank to be placed under provisional liquidation after failing to recapitalise over the course of its curatorship.
Interfin was placed under curatorship when high levels of non-performing insider and related party exposures, chronic liquidity and income generation challenges, poor board and senior management oversight, as well as violation of banking laws and regulations were discovered at the bank.
The recuperative curatorship started on 11 June 2012 for an initial period of three months and a corrective order was issued.
The curatorship period was subsequently extended to 31 December 2014 to give the curator and the board enough time to cause the recapitalisation of the bank and address its liquidity and capital deficiencies as per the corrective order.
As at November 2014, Interfin’s net asset position stood at a negative $166 million. The bank owes its depositors over $70 million.
The central bank in September 2014 initially recommended that Interfin surrender its licence for cancellation.
In a letter to the curator Peter Bailey, RBZ said surrendering the licence for cancellation would be in the best interest of depositors and creditors.
A board meeting held on October 28, 2014 noted that there were two potential investors keen to capitalise the bank.
As a result, the proposed cancellation of the bank’s licence became subject to Intefin’s failure to conclude these two proposals.
The bank was in discussions with a foreign investor Belle Holdings who had offered to inject $50 million into the business.
However, the deal failed to go through as the investor did not provide proof of funds and a letter of commitment by December 24 to save the bank from liquidation as had been requested by the Reserve Bank leaving the curator no option but to go for liquidation in the best interest of depositors and other creditors.
The order will be for three months starting from the expiry of the curatorship yesterday.
The order was also granted after shareholders failed to raise any funding and all efforts to recover money since the bank was placed under curatorship failed with the bulk of the recoveries going towards the curators fees.
The bank was reported to have collected 1,57 percent of the$107,2 million owed by debtors since it was put under recuperative curatorship.
Efforts to get comment from RBZ Governor Dr John Mangudya proved futile as he was said to be out of the country on a fundraising trip.
Online Reporter