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The merchant bank was placed under curatorship after the central bank unearthed serious financial irregularities in its operations. RBZ Governor Dr Gideon Gono disclosed this before a Parliamentary Portfolio Committee on Budget, Finance and Investment Promotion on Monday.
His response followed an enquiry by chairman of the committee Mr Paddy Zhanda on whether the merchant bank had been “exposed” to the apex bank.
The committee also asked whether the troubled bank had exposure to RBZ’s workers and how much the apex bank owed local banks.
“Renaissance has exposure to Reserve Bank of US$7 million constituted by US$3 million statutory deposits and the balance held as gold bonds,” he said.
The bonds were a debt clearance instrument of the central bank through which it sought to settle liability to mines by converting debt into an investment that attracted interest.
The central bank governor said the RBZ owed banking institutions US$83 million for the statutory reserves it used to finance Government obligations.
Dr Gono said in terms of statutory reserves used by the RBZ, the central bank would use proceeds from the disposal of non-core assets to settle the debts.
He indicated he was not aware of any direct exposures of Renaissance to RBZ workers. But he said while there could be indirect exposure this was certainly not the cause of the financial crisis the bank.
The governor said the RBZ was working on a wholesale disposal of non-core assets, companies and investments to settle part of its US$1,2 billion liabilities.
These include stakes in Astra, Tractive Power, Thuli Coal, Cairns, Carslone Enterprises, Fidelity Printers and Refinery and Venture Capital Company.
But he said the apex bank could have easily dealt with the debts had Government paid the US$1,5 billion it owes to the RBZ.
Asked how the bank contracted the huge debts now hampering its operations, Dr Gono said only 40 percent of the debt accrued during his tenure.
Fifty-five percent of it was inherited at independence in 1980.
A large part of the debt contracted when Dr Gono had taken charge at the RBZ emanated from harmonised elections carried on at the height of the economic meltdown when Government had little resources to fund the plebiscite.
The central bank also accrued huge debts when it funded farm mechanisation to enhance agricultural productivity after the land reform programme, as former white farmers removed their equipment when they left.
Funding was also extended to the Ministry of Finance for vehicle purchases, the Grain Marketing Board for grain and Noczim for fuel procurement, he said.
Online Reporter