Zamco mops $0,5bn bad loans from banks

HARARE - The Zimbabwe Asset Management Corporation (Zamco) has mopped up over $500 million bad loans from the country’s banks in an effort to make them attractive to foreign investors.

Finance minister Patrick Chinamasa said since the Special Purpose Vehicle began operations in 2015, it has relieved local banks allowing them to clean their balance sheets.

He said as part of efforts to strengthen the banking sector, government had advanced Treasury Bills (TBs) to all financial institutions whose bad debts were assumed.

A TB is a short-term debt obligation backed by a government with a given maturity, in most countries the promissory notes are issued with a maturity of less than one year.

“Through Zamco we have also given banks an opportunity to release resources that had been tied up in NPLs so  that they continue to support economic activities throughout the country

“We have also helped borrowers to restructure their facilities so that they would continue to service their loans at affordable interest rates over a relatively longer period,” Chinamasa said, pointing out that the average NPL ratio in the banking sector had also gone down with banks now aiming for the regional prudential benchmark of five percent.

According to central bank governor John Mangudya, Zamco has also started acquiring bad loans secured by mortgage bonds, after assuming total NPLs worth $812,5 million in 2016.

Some of the banks holding on to TBs after surrendering their NPLs to Zamco include FBC Bank, which at the end of 2016, held $7,3 million in TBs categorised under acquisition of NPLs by Zamco.

ZB Bank as at December 31, 2016 recorded a $20,4 million contribution from Zamco TBs, up from the $13,7 million recorded prior comparable period, with group chief executive Ron Mutandagayi saying Zamco had provided credit relief to the group with TBs worth $3,7 million in 2016 alone.

Zamco also helped revive the fortunes of local bank, Metbank, after it assumed about $14 million of Metbank’s debts to regional lenders, as the bank moved to clean its balance sheet.

At close of 2016, Zamco had a portfolio of acquired NPLs amounting to $812,5 million comprising a proprietary portfolio worth $548,6 million and a managed portfolio of $263,8 million.

Further, another financial services institution, NMB Zimbabwe, surrendered to the Zamco loans amounting to $11,6 million in the first half of 2016.

In addition, Zamco is also being used to assume bad debts from government-owned firms, like the recently-acquired pharmaceuticals group, CAPS Holdings.

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