We will act accordingly on ailing banks: Mangudya

HARARE - Reserve Bank of Zimbabwe (RBZ) governor John Mangudya insists that troubled banks have up to end-June to put their act together before authorities can move in to restore investor confidence.

The Central Bank boss told the businessdaily on the sidelines of a demonetisation briefing last week that he was waiting for the month to lapse so that he could “take appropriate action on the respective institutions”.

“As I said in my monetary policy statement (MPS), I am giving them up to the end of this month (to get their affairs in order) and after which we will act accordingly,” Mangudya said, adding some of the banks he had given a June ultimatum had since “surrendered their licences”.

According to the RBZ chief, there are some institutions who have not only indicated that they are hopeful of meeting the June deadline, but have “promised him that they will meet the cut-off time”.

This comes as several banks have closed due to poor corporate governance issues, including reckless lending bordering on outright mismanagement, low depositor and tight liquidity constraints, which have all impacted negatively on the sector.

In his second MPS in January, the former CBZ Holdings chief executive said larger banks must meet the country’s $25 million minimum capital threshold or sink.

The threshold deadline was initially June 2014.

According to Mangudya’s institution, closed AfrAsia Bank Zimbabwe Limited (ABZL), Obert Mpofu’s Allied, Metbank Zimbabwe Limited and Tetrad Investment Bank (Tetrad) were among the institutions that had failed to meet the threshold by early 2015.

Since the announcement, Allied and ABZL have gone under, while Tetrad is under judicial management and Metbank is reportedly frantically trying to meet the deadline as well.

Meanwhile, Mangudya has also insisted that licence surrenders were normal, given the tough economic environment that banks are operating in, and the sector remains “safe and sound”.

“I expect to act when the deadline lapses but this doesn’t mean that the whole sector is struggling, in fact, all this is very normal and quite expected. As the central bank therefore, we are here to regulate this and make sure strong banks remain,” he said.

But market watchers maintain the banking sector is fragile, given the number of banks that have collapsed this half year alone.

Other casualties include Trust Bank Corporation, which maintains it is still looking for investors, Capital and Interfin Banking Corporation Limited.

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