Trust owed $300 billion

Vincent Kahiya

TRUST Bank was owed at least $300 billion when it was put under curatorship last Thursday, half of it by the Reserve Bank of Zimbabwe (RBZ), it emerged this week.



T face=”Verdana, Arial, Helvetica, sans-serif”>Trust, whose collapse has been attributed in official circles to severe liquidity problems, paid the ultimate price for heavily lending to problem parastatals which failed to service their loans. The bank was also haunted by its past foreign currency dealings on the black market in which the Reserve Bank was a major beneficiary.


The Zimbabwe Independent this week established that the troubled bank, which had been in a short position since 2002, is owed US$27 million ($152 billion) by the Reserve Bank from foreign currency dealings on the black market.


The bank was also sitting on a bad loan book of $150 billion in money lent mainly to parastatals. Among them are the Grain Marketing Board, the Cold Storage Company and the National Oil Company of Zimbabwe.


The RBZ gave Trust about $280 billion, which has now ballooned to $1,4 trillion, from the Troubled Banks Fund to save it from collapse. By May Trust had already repaid $85 billion to the reserve bank, sources said.


Investigations by the Independent this week revealed that Trust had a US$30 million line of credit with the Cairo-based Afrexim Bank. Trust was drawing down from the facility for on-lending to the Reserve Bank, which on numerous occasions failed to pay back the forex.


To keep the facility working, Trust sourced foreign currency on the black market, reportedly from off-shore company Saturn Investments to pay Afrexim Bank.


Saturn Investments, represented in Zimbabwe by Jayesh Shah, was also understood to have been selling foreign currency to a number of financial institutions which were dealing with the Reserve Bank.


Saturn is currently embroiled in a legal dispute with Kingdom Bank over US$900 000 borrowed during the height of the forex crisis.


The sources said in February this year RBZ offered to pay back the US$27 million albeit in local currency at a rate of 1:3 500. Trust turned down the offer, arguing that it would not be able to source the forex to pay back the Afrexim loan, which was due in May.


Sources close to Trust said due to the RBZ’s erratic loan repayments, the closed bank was prejudiced of US$27 million between 2002 and early this year. Trust as a result owes Afrexim Bank the same amount.


The sources said when Gideon Gono took over as RBZ governor at the end of last year, he was aware of the foreign currency transactions between Trust and the central bank.


Trust Bank was last year accused of straying from its core business by investing in non-banking undertakings such as property. There however are some who believe that the bank could have been saved if the rescue package from the central bank had been delivered earlier.