THE Zimbabwe Allied Banking Group (ZABG), an amalgam of collapsed banks due for opening on Monday next week, is still illegal because the Reserve Bank of Zimbabwe did not follow the law in it
This comes amid revelations this week that the bank had not completed the crucial legal process required to legalise the bank by close of business yesterday. The authorities have not complied with a single demand of the Troubled Financial Institutions (Resolution) Act, sources close to the move said.
The Act, signed into law by President Robert Mugabe two weeks ago, requires the RBZ to seek confirmation from a High Court judge to take over any bank to be absorbed into ZABG. The RBZ is also required by the same law to inform former directors, shareholders and creditors of the decision to amalgamate their bank into ZABG. The interested parties, according to the law, must be advised at least two weeks before the opening of the ZABG.
The law allows stakeholders to challenge the move to take over their bank. Only after the former directors, shareholders and creditors have been informed and the judge has consented to the move is the ZABG allowed to swallow the bank. A proper notice is supposed to be sent out to the stakeholders.
It emerged that none of these legal requirements have been met. This is despite declarations by RBZ governor Gideon Gono that the bank would open on Monday next week. But despite this outstanding legal issue, the Reserve Bank was by Wednesday pulling down banners and posters of Barbican, Royal and Trust Bank, to replace them with the new ZABG logo.
Businessdigest understands none of the shareholders and former directors was officially informed of the move to take over their bank. Royal Bank chief executive Jeffrey Mzwimbi said last night that he was now seeking legal advice on the issue. He also confirmed that he had not been officially informed of what seems to be an arbitrary decision of the central bank.
“We are seeking legal advice because this has become a legal issue.
However, I can confirm that neither me nor other directors and shareholders have been informed of the decision to take over our bank,” said Mzwimbi.
Trust chief executive and founding director William Nyemba refused to comment on the issue but this paper understands that no formal communication was made to him as required by law.
Although this paper could not talk to former Barbican chief executive and owner Mthuli Ncube, it is also understood that he has not been informed. Respective shareholders and former directors of the two banks are yet to be given a chance to challenge the matter in court.
ZABG chief executive Stephen Gwasira confirmed that they were still to clear some legal challenges. He said these were now being rectified. “We know that there are some crucial issues outstanding. We are trying our best to rectify the issue,” Gwasira said.
He could not however confirm whether these issues would be cleared before the bank opens next week
Other shareholders and former directors of the three banks that have been taken over are now bracing for a legal dogfight with the RBZ. Sources say they are likely to pounce on the ZABG as soon as its doors open.
“As we speak even the depositors and creditors whose monies are in the closed banks have been turned into shareholders. Nobody knows the value of the ZABG shares,” said one of the former directors.
Others are also planning to challenge the valuations of their banks, which they say was deliberately undervalued by curators to justify the takeover of their financial institutions.