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Business Reporter
The National Social Security Authority on Wednesday closed the doors on a failed investment, sinking $30 million of public funds after the Reserve Bank of Zimbabwe cancelled the licence for Capital Bank. Capital Bank rose out of the ashes of troubled Renaissance Merchant Bank previously owned by First Mutual Limited and taken over by the National Social Security Authority in 2012.
NSSA says government influenced its $24 million investment into the bank having objected to the decision due to the banks going concern. After the realisation the bank did not perform accordingly, the NSSA board decided to wind up the bank to avoid further losses.
The RBZ in a notice on Thursday said Capital Bank’s woes had worsened after NSSA had indicated that it would not recapitalise the struggling institution.
“While the institution is undercapitalised, the major shareholder NSSA, is no longer willing to inject additional capital into the bank and in the absence of capital injection, the financial condition of the banking institution dictates the banking institution be wound up,” it said.
It said Capital Bank had been operating in “an unsafe and unsound financial condition characterised by critical under capitalisation, persistent loses, chronic liquidity challenges and inordinately high levels of non-performing loans.”
The bank is one of the institutions that were struggling to meet the capital threshold of $100 million by end of this month that the central set bank two years ago.
Depositors and creditors would soon be advised on how they will recover their funds, the RBZ said.
Reports indicate that NSSA, whose investment in Capital Bank using pensioners funds torched a storm, had expressed interest in setting up a less demanding micro-finance institution.
Capital Bank joins the league of failed indigenous banks which have closed shop in the past decade.
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