AfrAsia depositors receive $1,4m

HARARE - The Depositor Protection Corporation (DPC) has so far disbursed over $1,4 million to AfrAsia Bank (AfrAsia) — formerly Kingdom Bank — depositors, with about $2 million still outstanding, businessdaily has established.

“As at July 20, 2015, DPC has paid 43 percent of the insured deposits. This translates to about $1,46 million that has been paid to date out of a total insured amount of $3,4 million,” said DPC chief executive, John Chikura.

“Insured deposits represent the guaranteed amount, payable up to a maximum of $500, which depositors will receive if they submit their claim form,” he said.

According to the DPC boss, balances above $500 will be paid through the liquidation process on a pro-rata basis.

Afrasia Zimbabwe Holdings Limited (AZHL) surrendered its operating licence early this year, after failing to meet the Reserve Bank of Zimbabwe’s $25 million minimum capitalisation whose deadline was end of June 2014.

As at September 30, 2014, the bank’s capital stood at $13 million, the financial institution had over 6 000 depositors.

The DPC has also issued out a notice of the first AfrAsia creditors and members meeting before the Master of the High Court to be held in the capital on July 31, 2015, whose purpose is submission of proof of claims by creditors and presentation of the liquidator’s interim report.

Chikura recently revealed to the businessdaily that his institution had the capacity to pay only $6,4 million of the total amount trapped in collapsed financial institutions that include AfrAsia, Allied Bank, Interfin Bank, Genesis Investment Bank, Royal Bank and Trust Bank.

“Internationally, the effectiveness of a deposit protection scheme depends on the coverage level, that is, the percentage of depositors with deposits equal or below the protection limit,” he said.

Chikura noted that public policy objectives of the DPC — in line with international best practice — recommend coverage of around 90 percent of depositors by number.

“Balances in excess of the cover level are paid for via the liquidation process whereas issues of the dividend or proportionality become valid. As it stands, about 85 percent of the depositors have deposit balances below $500 and will be paid in full by the DPC,” he said.

However, Chikura said the DPC had approached the Finance ministry and the Bankers Association of Zimbabwe (Baz) for the upward review of premium contributions by banks to review the current $500 threshold to $1 000 per depositor.

“This will enable DPC to cover at least 92 percent of depositors in full and comply with the public policy objectives full coverage benchmark of at least 90 percent of depositors,” he said.

At the current deposit insurance cover of $500, about 88,1 percent which is approximately 1,2 million out of about 1,4 million depositors are covered in full by the Corporation.

Chikura said his organisation also needs to be capitalised to enable it to meet the international target fund ratio of two percent of the total deposits base.

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