ZABG seeks NIEEB bailout

HARARE - ZABG Bank Limited (ZABG) has approached the National Indigenisation and Economic Empowerment Board (Nieeb) for possible funding to help it meet the Reserve Bank of Zimbabwe (RBZ)’s first phase minimum capital requirements.

The bank — a brainchild of Central Bank governor Gideon Gono — is one of seven, out of 21 banks, that have failed to meet a December 31 deadline for banks to increase their capital by at least $25 million.

Further to confirmations by ZABG board chairman Farai Mtamangira and his chief executive Stephen Gwasira, the bank’s spokesperson and marketing head Ruth Verah, said: “…we confirm that ZABG Bank is in negotiations with the National Indigenisation and Economic Board.”

“However, issues pertaining to capitalisation will be communicated with yourselves after consultation with the Reserve Bank.”

Earlier, Mtamangira - who also sits on the Nieeb’s board - had confirmed the issue to businessdaily.

“We have engaged Nieeb. We have been talking to them, but I don’t have the finer details. My CEO (Gwasira) will give you an accurate update,” he said, adding though that he was unsure how much money his bank required from the public fund.

However, Nieeb chief executive Wilson Gwatiringa claimed to this paper that he was unaware of the development.

“I am not aware of that. There is no agreement between us and ZABG. Maybe something will happen,” he said.

With the RBZ announcing a phased recapitalisation of banks to $100 million by June 30 next year, small banks like ZABG face a tall order as they try to comply with the order where they are expected to have $50 million by June 2013, $75 million by December and the full amount by June 2014.

In his maiden 2013 monetary policy last Thursday, Gono said ZABG — owned by Mines minister Obert Mpofu - needed to improve its recapitalisation plan before hinting that the bank was courting deep-pocketed investors.

The wealthy minister gained control of the once-troubled bank after his family business Trebor and Khays invested $22,8 million into the institution, enabling it to meet a $12, 5 million RBZ minimum capital then.

“I understand they (ZABG) are working with Nieeb,” the RBZ boss said, jokingly adding “as you know Nieeb is awash with cash sitting on some $1 billion or so.”

However, analysts say Mtamangira’s position as ZABG board chair and Nieeb member raises potential conflict of interest concerns.

“This certainly becomes very suspicious. There is certainly conflict of interest. However, Mutamangira’s role as ZABG chairman is to look for equity capital not loans,” leading independent economist John Robertson said.

On the other hand, the possibility of Nieeb — created to implement the indigenisation programme — channelling funds into a private sector bank at a time other public funds such as the National Social Security Authority have been rapped raised further eyebrows.

Furthermore, Robertson said there was a misconception that the National Indigenisation and Economic Empowerment Fund (Nieef) — serving as a sovereign wealth fund — holds money.

“Nieef does not hold the $4 billion Kasukuwere claims. It’s a collection of shares which will have to be liquidated,” he said.

In recent indigenisation deals, Nieeb took over 31 percent stakes each in platinum group metals producers Zimbabwe Platinum Mines Limited and Mimosa Platinum.

“They are not empowered with money. I think the whole thing is not proper,” said Robertson. - Eric Chiriga, Business Editor

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