FINANCE minister Tendai Biti says Zimbabwe’s banking sector is sound despite uncertainty over the fate of AfrAsia Kingdom Bank (Kingdom) amid reports the institution is struggling to plug a US$21 million hole that could prejudice investors and have a contagion effect on the financial sector.
Highly placed sources at the central bank have also indicated the banking sector is currently unstable, with up to four banks in trouble and a liquidity crisis cutting across all players.
Speaking after delivering the country’s state of the economy address for the month of April, Biti told businessdigest he had met Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono to discuss the current state of the financial services sector and possible solutions to any existing challenges.
“Zimbabwean banks are quite strong, but we want them to be even stronger. That’s why we are coming up with new and comprehensive amendments to the Banking Act,” he said.
“The only problem is that some of us are greedy and we end up taking shortcuts and prejudicing depositors and that is my biggest worry. Some of our local banks have a high prevalence of theft.”
As first reported by the Independent earlier this month, RBZ forensic investigators were camped at Kingdom after the central bank established the commercial bank was reeling from a massive US$21 million under-performing loan and could be placed under recuperative curatorship to protect depositors’ funds and the banking sector.
It emerged the US$21 million came as a result of problems with Kingdom’s major debtor, Valley Technologies.
Meanwhile, last week businessdigest also reported that former majority shareholders in Intermaket Holdings (IHL), mainly Nicholas Vingirayi’s Transnational Holdings, together with Econet Wireless Holdings Ltd, filed a legal bid to annul the forced takeover in 2008 of the IHL group by the former Zimbabwe Financial Holdings Limited (Finhold).
According to an application filed in the Supreme Court earlier this month, the former majority shareholders are seeking to have a 2008 High Court judgment, where the transaction that saw the former Zimbank (now ZB) and Intermarket Holdings takeover approved, set aside.
Biti sided with Vingrayi, saying he should get back his assets.
“I was discussing with the RBZ governor and our desire is that whoever lost their assets for whatever reason, be it Mutumwa Mawere or Vingirai should have them reinstated,” Biti said.