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New policy to clean up mess in banks

Godfrey Marawanyika

THE Reserve Bank of Zimbabwe (RBZ) has cobbled together a new policy for banks known as the Troubled Bank Resolution Strategy expected to deal with problems affecting the banking sector.

The policy will also result in the RBZ trying to consolidate and correct the problems that occurred during the indigenous financial sector boom.

The latest development comes hard on the heels of discussions of a proposed merger between Kingdom Bank, Renaissance Merchant Bank and African Banking Corporation (ABC) to form one consolidated locally-owned financial institution.

RBZ governor Gideon Gono this week confirmed the setting up of the Troubled Bank Resolution Strategy but refused to disclose its operations.

The policy is expected to be launched by the end of this month.

“It is true that we are working on the Troubled Bank Resolution Strategy but I am still to share it with some of my principal officers,” he said.

“By 2005, we would have wanted to clean up the mess of 2003 and 2004 in the banking sector. Just wait for September 30 and see what will have happened. But progress has been made as some of them are now running around ahead of the deadline.”

By the end of this month banks are expected to have forked out $10 billion for their licensing fees. Although the governor refused to shed light on the plan, businessdigest understands that the central bank will have the option to either withdraw a banking licence from a firm that would have failed to meet the new capitalisation requirements or ask them to merge.

Kingdom chief operating officer Franky Kufa this week confirmed that suggestions had been made that some locally-owned banks including his should merge. He, however, pointed out that no concrete agreement had been reached.

“Nothing has been agreed as yet. These were just suggestions,” he said. “But if there is an opportunity for us and anything that increases shareholder value then we will consider either mergers or acquisitions.”

Group chief executive officer for Renaissance Patterson Timba could not be reached for comment.

ABC’s group structured finance officer Hashmond Matera said he was not aware of any discussions on the possible merger.

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