HomeBusiness DigestWe will not hesitate to close banks'

We will not hesitate to close banks’

Itai Mushekwe

RESERVE Bank governor Gideon Gono yesterday attacked what he described as “economic saboteurs” and errant banks for undermining his economic turnaround strategies.

In the monetary policy statement, Gono warned: “We will not hesitate to move and close banks swiftly.”

He said the central bank’s major objective remains that of ensuring financial stability through early detection of irregularities in the sector.

“In that regard, the Reserve Bank has established a dedicated unit under the Bank Licensing, Supervision and Surveillance division that will specialise in implementing prompt corrective action programmes in order to promote financial sector stability and hence reduce the adverse and often inadvertent negative externalities associated with problem bank resolution strategies,” he said.

Last year the financial sector was in turmoil after the Reserve Bank cracked the whip on errant banks that allegedly used public funds to venture into non-core business activities. The result was a collapse of several financial institutions, most of which were placed under curatorship. Financial institutions that were placed under the management of curators were Barbican Bank, Rapid Discount House, CFX Bank, CFX Merchant Bank, Royal Bank, Time Bank, Trust Bank and Century Discount House.

Also placed under the compulsory six-month closure were Intermarket Banking Corporation and Intermarket Discount House.

Gono said the central bank had finished doing a forensic audit which would be used to bring dubious bankers to account.

“As monetary authorities we also wish to inform the banking public that the Reserve Bank now has finished the independent forensic audits on all the 2004 failed banks, which audits, detailing the roles and culpability of former owners/managers, are now forming part of the unwavering programme to hold defaulters and culprits accountable,” he said.

Promising to keep the financial terrain uniform, Gono said: “No amount of calculated media and Internet campaign will deter us from closing banks,” although he commended the role of the media in information dissemination.

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