RBZ clears distressed banks Mr Luxon Zembe
Luxon Zembe

Luxon Zembe

Brighton Gumbo Business Reporter
THE Reserve Bank of Zimbabwe (RBZ) has cleared all financial institutions that were on the distressed bank list after the banks managed to meet the minimum capital requirement.

The prescribed minimum capital requirement for commercial and merchant banks is pegged at $25 million while that for building societies is $20 million.

In a statement accompanying Metbank financials for the half year ended June 30, 2015, the bank revealed that RBZ has cleared all banks from the Distressed Bank List.

“The RBZ has cleared all banks that were on the Distressed Bank List as at June 30, 2015. Metbank recapitalised to $31,6 million while Tetrad Investment Bank has remained under judicial management,” said Metbank.

Early this year the central bank announced that Metbank and Tetrad Bank were undercapitalised but would not cause any systemic risk to the banking sector.

Economics commentators who spoke to Business Chronicle yesterday said the move by the RBZ was commendable as it facilitated clean up and stability within the financial sector.

An economic commentator, Luxon Zembe, said the initiative was good as it restores confidence in the banking sector.

“I think just like diseases, people who’re found sick are put under quarantine so as banks, those that are underperforming have to be isolated from those that are well performing to ensure stability and market confidence within the sector,” he said.

Zembe said having the once distressed banks back in the mainstream financial sector was a confirmation of improvement in the economic performance.

An economist with a leading financial institution who preferred not to be named, said the cleared banks should be commended for working hard to meet the central bank’s minimum capital requirements.

Meanwhile, the Metbank chairman Wilson Manase said provision for their doubtful debts decreased by $1.9 million from $11.8 million as at December 2014 to $9.9 million as at 30 June 2015.

Manase said the bank is also making efforts to reduce operating expenditure

“To this end, the bank continued on a downsizing mission by further streamlining its branch network to five, following the closure of two branches and an agency during the half year ended June, 30, 2015,” he said.

Manase said they have completed a restructuring exercise resulting in the conversion of current liabilities amounting to $7.3 million into equity and thus subsequently increasing the bank’s capital.

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