THE Zimbabwe Allied Banking Group (ZABG) is in a precarious financial position as it has failed to pick up enough business to keep it going. Information to hand shows that the bank three week
s ago suspended all lending due to insufficient deposits.
Sources say top management at the bank decided to suspend lending because of a serious mismatch between what was being loaned and deposits. Under normal circumstances there should be a match between what the bank lends and what it receives in deposits.
The bank now plans to retrench employees in light of the prevailing financial crisis. Sources say the job cuts are part of a highly confidential report, which indicates that ZABG would have to retrench to stay afloat.
The report, sources say, is likely to see the bank laying off more than 60 employees. But they say the number could increase because the financial constraints inherited from the two collapsed banks continue to haunt the bank.
ZABG is an amalgam of Trust and Royal which crumbled due to a liquidity crunch last year.
Currently there are more than 500 workers on the ZABG payroll but top management says this is draining limited resources.
Insiders yesterday said the bank’s electronic banking division had only one corporate client on its books. Other divisions such as retail banking, wholesale banking and stockbroking were battling for shrinking business in the financial sector.
“The bank has been unable to pick up sufficient deposits,” said a senior manager at ZABG.
“The bank has failed to make the impact that was anticipated at inception.”
Apart from a thin deposit base, the bank is poorly capitalised, as it will not be receiving funds from the fiscus.
At one time central bank governor Gideon Gono said the bank would be capitalised to the tune of $2 trillion, making it the country’s largest bank. However, he later backtracked after the central bank failed to raise the funds. He denied ever making such a claim.
It has since turned out the $2 trillion mentioned by Gono was simply deposits from the failed banks (constituting ZABG) that were converted into equity.
Sources said senior managers had now been told by the Reserve Bank to generate more business to raise their own working capital.
Chief executive Stephen Gwasira could not be reached for a comment as he was said to be out of his office attending a meeting.