THE Reserve Bank of Zimbabwe has approved the take over of clients previously under the management of now defunct GP2 Asset Managers by Old Mutual Asset Managers Zimbabwe (Omam).
GP2 was shut down by the central bank after it was found to have diverted from its core business and for operating outside its legal framework.
When GP2 was closed down its clients had in excess of $200 billion.
Old Mutual public relations manager Margaret Vera confirmed the proposed transfer deal.
She however said the deal was limited to clients under the management of the former asset manager. It did not include the total operations of GP2.
“This agreement was concluded with the approval of the Reserve Bank of Zimbabwe and is limited to former GP2 clients,” said Vera.
“We need to emphasise that this arrangement is not in any way a takeover of GP2 the company,” Vera said.
The arrangement was mooted as part of efforts to reduce exposure of the company’s clients to the closed financial institution, a position that Old Mutual confirmed.
“The purpose of the arrangement was to minimise the effect of the closure of GP2 on their clients,” Vera said.
Operations at GP2 Asset Managers took a bad turn after the central bank denied its holding company, the GP2 Group, a lending licence under GP2 Finance.
The finance arm was found to have started lending funds before being issued with a licence. The unlicensed GP2 Finance arm had lent as much as $5 billion during its short life. When it was wound down, the finance unit was owed funds totaling more than $500 million.
At least 15 registered managers face mandatory closure after it was found that they were financially unsound and were operating outside their mandate.
Problems in the sector were blamed on regulations issued by the RBZ directing that asset managers could not hold huge chunks of investment in distressed sectors.
Until March, Zimbabwe had 31 registered asset management companies, but a hostile business environment and stringent operating guidelines have claimed the scalps of at least four firms.
At its peak in 2003, the asset management industry held 60% of Zimbabwe’s total deposits.