Zim Diaspora

Saturday
Oct 25th
Text size
  • Increase font size
  • Default font size
  • Decrease font size

LATEST NEWS COMMENTS

Frontpage Slideshow | Copyright © 2006-2011 JoomlaWorks Ltd.

Gono closes indigenous banks

By Janet Shoko

A Zimbabwean bank on Monday voluntarily gave up its licence, while another was placed under curatorship of the central bank, as the banking sector continues to feel the heat of an underperforming economy.

Genesis Investment Bank handed in its licence, while Interfin was placed under curatorship for six months, as both banks faced liquidity crises.

Genesis directors had since 2009 been trying to convince close to 20 local and foreign potential partners to recapitalise the bank.

Reserve Bank of Zimbabwe welcomed the move saying "there is no prudential basis for the continued existence of the bank".

"[The] Board of Directors of Genesis Investment Bank met and resolved to voluntarily surrender the institution's banking licence in line with Section 14 (4) of the Banking Act [Chapter 24:20].

"This follows failure by the institution to raise the requisite minimum capital from over 20 different potential inventors whom the bank tried to engage since 2009," Central bank governor, Gideon Gono said in a statement.

The Reserve Bank chief said the bank's board had failed to steer the institution out of "numerous deficiencies" as it was grossly undercapitalised to the tune of $3,2million; suffered persistent losses; had poor asset quality, a paltry deposit base and faced chronic liquidity challenges.

"

As such, there is no prudential basis for the continued existence of the bank," Gono continued. 

"Accordingly, the Reserve Bank of Zimbabwe has closed Genesis Investment Bank and commenced proceedings for the liquidation of the institution."

Recently, The Africa Report reported Genesis had $4 600 in its Real Time Gross Settlement (RTGS) account, $2 788 in cash and $1 090 in its nostro balances against $1 141 392 in loans and advances.

Interfin Bank had $105 489 614 in loans and advances against a paltry $3 567 in its RTGS account, $137 422 in vault cash and $98 483 in its nostro account.

This rendered the bank technically insolvent as it has little resources to fund demands from its customers.

Meanwhile, the Securities Commission, which regulates capital markets, has cancelled Interfin Securities and Remo Investments' licences, leading to investigations into the operations of the stockbrokers.