FIRST National Building Society (FNBS) directors are unlikely to contest the liquidation of their company by the Reserve Bank of Zimbabwe (RBZ), a senior
official told businessdigest this week.
The official, who requested anonymity for professional reasons, said directors of the beleaguered financial institution, who failed to mobilise resources for the resuscitation of the building society, were not going to challenge the RBZ’s decision last week to apply for the liquidation of the business.
“We are not going to challenge the liquidation. That is our position,” the official said.
RBZ governor Gideon Gono said last week the central bank “fully endorsed the liquidation of the society as all possible attempts to revive it had failed”.
The RBZ last year gave FNBS an opportunity to seek new investors for fresh capital by June 30, failure of which the institution would be forced into liquidation.
It is understood FNBS directors managed to secure the investors, but when the central bank wrote to them in June to release the funds, they indicated that they had no capacity to inject the required funding to save the society.
This prompted FNBS shareholders to offer undeveloped land as capital, a move the central bank said was contrary to international best practices and the provisions of the Banking Act and Regulations.
An FNBS creditor’s meeting last month subsequently resolved to seek the society’s liquidation to allow the liquidator’s lawyers to apply for the discharge of the Scheme of Arrangement earlier agreed upon by shareholders.
FNBS has been under the management of a curator since February 2003.
A final order of liquidation was granted in April last year but the Reserve Bank suspended it to facilitate a bailout package.
A scheme of arrangement was then negotiated in terms of which creditors and depositors would be paid. This scheme was dependent upon the shareholders and investors of FNBS submitting a satisfactory re-capitalisation plan to the Reserve Bank, demonstrating capacity to meet the minimum capital requirement of $750 billion by the September 30 deadline.
“The investors have failed to raise the necessary funds to ensure the minimum capital requirement of $750 billion and accordingly the proposed recapitalisation of First National Building Society cannot take place and the proposed Scheme of Arrangement will fail,” FNBS curator David Scott told last month’s meeting of creditors.