Roadwin Chirara/Chris Goko
ZIMBABWE’S Central Bank yesterday raised the minimum capitalisation levels of commercial banks to $100 billion (nearly U$10 million) in efforts to further strengthen the country’s financial sector.
gn=justify>Prior to the announcement, retail bank subscriptions to the mandatory reserves were pegged at $10 billion.
In raising the minimum capital adequacy, bank governor Gideon Gono said he had taken into consideration international trends and measures to strengthen public confidence in local banks.
He however said financial institutions had up to September 2006 to re-align their positions.
“Cognisant of the challenging environment in which banks are operating and the key role of capital as a buffer, and final line of defence against potential losses, it has become necessary that…we once again review the minimum core capital requirements of banking institutions,” Gono said.
The Reserve Bank, he said, had carried out a comparative analysis of the country’s capital adequacy against regional jurisdictions and it has been proven that Zimbabwe still falls behind.
The new measures also affect merchant banks, building societies, discount and finance houses as well as asset management companies.
Merchant banks, building societies and discount houses will now be required to pay $75 billion, 10-times more than what they have lodged with the Reserve Bank now.
However, a proportion of Zimbabwean banks, led by pioneering indigenous commercial bank Kingdom Financial Holdings Ltd, has already moved to boost or amplify its statutory reserves, while another emergent bank NMB Bank Ltd is also coming up with a $100 billion rights issue.