ZABG, Genesis need a miracle

policy earlier this year, Reserve Bank Governor Dr Gideon Gono said banks that fail to meet the regulatory capital requirements would have to close by April 1, next week.
Questions have already started popping up on whether Genesis Investment Bank and ZABG Bank have seen their last.
At least Royal Bank has made some progress.
Last month Royal Bank said that it had engaged a Kenyan investor for a US$20 million fresh capital injection while Genesis Bank indicated that it was discussing with SwissCharge of Zambia. ZABG was negotiating with the trio Unicapital of Mauritius, Swiss AFG Global and local private firm Trebor and Khays and if the deal pulls through it would be a landmark achievement.
And Royal Bank yesterday said its Kenyan partner, Commercial Bank of Africa, is set to snap up a 49 percent stake in the local bank, which would see it meeting regulatory capital requirements.
Could ZABG and Genesis be harboring surprises that will stun the market in the coming week or is their sheer silence an indication nothing is cooking in the pot and epitaph could already be on the wall?
There has not been any indication of a possibility of mergers between the undercapitalised banks nor with any of the strong banks, ruling out the occurrence of the seemingly easiest option.
Analysts had already dismissed the possibility of mergers between the undercapitalised banks on the basis that the banks’ capital levels are either way off the mark or at negative levels.
Further, no established bank would want to absorb a troubled bank, especially one with negative capital as that would weaken their balance sheets and create dangerous consequences.
The consequences of failing to comply would be dire and would inconvenience depositors in a big way, but achieving the US$12,5 million minimum capital compliance threshold will be a daunting task for some.
Regulatory authorities have already indicated that they have no appetite for more extensions of compliance periods and are hell bent on dealing with the issue once and for all this time around.
Compliance with minimum capital requirements is critical considering the repercussions in the case of a bank failure, and the banking sector crisis of 2003-2004 is good testimony of that.
During this period, depositors lost money, had their funds trapped while other financial institutions experienced a run on deposits once news filtered through that certain banks were struggling.
As such, all stakeholders are waiting with bated breath to find out whether the three banks have really had sleepless nights to fashion out some tangible solution over the short period they had.
Because all banks were given, for all intents and purposes, sufficient time to mobilise resources to beef up capital levels, some of which were in negative levels, but up to date the three have not.
ZABG has capital deficit of US$15,3 million while Genesis has negative capital of US$3,2 million making the case for fresh capital at these two banks more critical than in any other bank.
Foreign investors would seek a huge discount considering the banks’ situations in terms of the time they had until the deadline, which would put the shareholders at a major disadvantage.
While Finance Minister Tendai Biti recently gave another hint that there will be no tolerance for non-compliant banks, instructed the RBZ to work on a framework for mergers, it looks none will merge.