Trust Bank courts foreign investors

although it had complied with the Reserve Bank’s US$12,5 million minimum capital requirement, it remained mindful of the need to enhance its financial capacity.
Managing director Mr Nyevero Hlupo said the new investors, coming in at both debt and equity level, would add value to the bank.
Apart from improving loan-underwriting capacity, the capital is expected to enhance its loan tenure and reduce the cost of funding.
“The bank is attracting credible long-term investors,  able to add value to its going forward. Their interest in investing in Trust Bank is a statement of the confidence they have in the bank and also what they see in the country,” he said.
Trust Bank said “significant progress had been made in the negotiations and it is expected that agreements would be finalised soon, as they are now at a very advanced stage”.
Dollarisation has brought about the much-needed stability to the economy and the business environment, say analysts. Companies are now able to plan and get on with their businesses with a fair level of predictability with regard to the currency issue.
But when the stability wiped out hyperinflation, some companies faced liquidity problems in recapitalising. Dollarisation basically wiped all the Zimbabwe dollar capital and most companies found themselves gasping for liquidity.
Two options readily available to businesses are debt or giving equity investment. Most companies have opted for debt investment, mindful of the current valuations and the value they would give away if they were to consider the equity route.
Trust Bank said the fresh capital would enable it to underwrite more loans than before, having previously supported mostly small-to-medium enterprises.
Liquidity challenges stemmed from a decade of economic instability that saw Gross Domestic Product contract by an estimated 50 percent as inflation shot up.
Investor scepticism about Zimbabwean politics, limited foreign capital inflows and reduced capacity utilisation, a lack of competitiveness and weak export capacity have resulted in companies struggling to raise capital internally to recapitalise.
Tight liquidity conditions in the entire economy have also pushed up the cost of borrowing, making it almost impossible for companies to access bank loans to support their operations.