Zimpapers Logo

Pamela Shumba  Chronicle Reporter
TRUST Bank was shut down by the Reserve Bank last night for abusing depositors’ funds and imprudent banking practices.  Norman Mataruka, the registrar of banking institutions, said the bank’s licence was cancelled because all efforts to rectify its problems had failed.

The bank has been failing to give depositors their money for weeks – one of the banks worst-hit by the ongoing liquidity crisis.
“The Reserve Bank was left with no option but to take the supervisory course of action in the interest of protecting depositors’ funds and financial sector stability,” Mataruka said in a statement.

“The public will recall that the bank was previously closed in 2005 for imprudent banking practices.”
He said the bank was financially unsound and was not operating in accordance with the Banking Act.

The RBZ board took the decision to shut down the bank with approval from the Minister of Finance, Cde Patrick Chinamasa.
Mataruka explained: “Trust Bank is not operating in accordance with sound administrative accounting practices and procedures in violation of the Banking Act Chapter 24:20.

“The bank, which is critically under-capitalised with a core capital of $1,9million, has been posting persistent losses and cumulative loss positions of $18, 01 million since inception.

“The institution has been facing critical liquidity challenges emanating from poor loan book and the inadequate and gross abuse of depositors’ funds.”

Mataruka said the bank was no longer safe and sound as its recapitalisation efforts had all been futile.
“In the circumstances, the maintenance of registration of Trust Bank as a banking institution is undesirable and is not in the interest of its members, depositors and creditors.

“Accordingly the bank’s licence has been cancelled in terms of section 14 (1) (j) (f) and (k) of the Banking Act for the reasons which include failing to maintain net assets, which together with other financial resources available to it, are of an amount and nature sufficient to safeguard its creditors.”

Trust Bank had failed to maintain the prescribed minimum amounts of capital and reserves and was also engaging in “undesirable methods of conducting business”.

Mataruka said Trust Bank was no longer a banking institution as defined in the Banking Act.
“Its status is that of a company registered in terms of the Companies Act Chapter 24:03. Members of the public are accordingly, advised, for their own protection, not to undertake any banking transaction with the de-registered bank as they do so at their own risk,” he explained.

“Members of the public are advised that the Reserve Bank shall, in conjunction with the Deposit Protection Corporation, institute liquidation proceedings in order to facilitate payments to depositors and other creditors.”