HARARE - The Reserve Bank of Zimbabwe (RBZ) says AfrAsia Kingdom Zimbabwe Limited (AKZL)’s banking unit Kingdom Bank Limited (Kingdom) is in a “sound financial position to continue normal business”.

This comes on the back of media reports that Kingdom is on the brink of collapse as a result of a $21 million under-performing loan granted to Zach Wazara’s Spiritage subsidiary Valley Technologies (Valley Tech).

“In view of our on-site and off-site evaluations of the bank (Kingdom), and concrete corrective measures being taken by the bank, with our approval, and given the quality of the major shareholder, AfrAsia Bank Limited (AfrAsia) and their commitment to ensure stability of the bank, we are confident that the situation is under control for normal business to continue,” said RBZ’s governor Gideon Gono.

Mauritius-based AfrAsia holds a 35 percent stake in AKZL after investing $9,5 million in the financial services group.

Gono said the central bank is also aware of the measures which were currently being taken by Kingdom to regularise and address the performance of its loan facilities, including Valley Tech’s.

“We emphasise that the stability of any banking institution is a function of the cooperative efforts and goodwill of all stakeholders and to this end, the Reserve Bank wishes to encourage this cooperative spirit among bank customers,” the RBZ chief said.

He added that the central bank was aware of the dispute between Kingdom’s founder and shareholder Nigel Chanakira and Wazara, which the monetary authorities were in the process of mediating with a view to resolving amicably.

“We have also undertaken to approve and facilitate all legal and administrative requirements on the part of AfrAsia Bank Limited, and any other shareholder, existing or new, should it become necessary that they inject more money and increase their shareholding, which ultimately will see the bank emerging much stronger in terms of capital, corporate governance, and any other issues raised during our on-going supervision of the bank.”

Wazara, Spiritage chief executive, had written to the central bank highlighting what he said was a deliberate attempt to conceal non-performing loans on the part of Kingdom.

In the May 2 letter, Wazara said Kingdom entered into a debt-to-equity swap for 80 percent of Valley Tech through the bank’s special purpose vehicle — Lalela Trading — in December last year after the mobile network operator failed to settle its loan obligations.

Wazara also claims that Kingdom acquired the shares on the understanding that they would allow a partner, a Chinese company, to take over the company. - Eric Chiriga and Kudzai Chawafambira