Capital Bank right-sizes

HARARE - Capital Bank Corporation Limited (Capital), majority-owned by pensions administrator National Social Security Authority (Nssa), has embarked on a rationalisation exercise to strengthen its operations.

Lawrence Tamayi, the bank’s managing director, told businessdaily that the move was targeted at enabling the bank to sustain its cost base.

“The bank has reflected on its performance post curatorship. The current banking business model and its cost structure is not sustainable in this environment,” he said.

The Capital boss said the institution — 87 percent-owned by Nssa — had not realised a profit since dollarisation of Zimbabwe’s economy in 2009 due to “high level of non-performing loans which contributed to the collapse of RMB, low customer base, a high cost structure in terms of operating expenses and a high cost of funding.”

He said the challenges prompted the board to “refocus the banks’ direction.”

“The rationalisation, which is a first phase, will ensure that our cost structure is streamlined and will be reviewed periodically to ensure that the intended objective is achieved,” he said, adding that there will be no disruptions to service delivery.

Tamayi said the bank had already made internal communications.

“Naturally a rationalisation process will result in some employees being affected,” he said.

This comes as Nssa met Reserve Bank of Zimbabwe (RBZ) authorities last month to discuss Capital Bank’s recapitalisation initiatives.

Nssa is forging plans for banks it has interests in to comply with the central bank’s minimum capital requirements.

In March, Capital Bank raised $6 million to be channelled towards complying with the RBZ’s minimum capital requirements.

Last year, Gono ordered banks to recapitalise to a minimum $100 million in a phased manner.

In the first phase, whose deadline expired on December 31, 2012, commercial and merchant banks were supposed to increase their minimum capital to $25 million, then up it to $50 million by June 30 this year and $75 million by December 31.

The institutions should reach $100 million by June 30, 2014. - Eric Chiriga, Business Editor

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.