HomePoliticsGono misled public

Gono misled public

Chris Goko/Shakeman Mugari

RESERVE Bank of Zimbabwe (RBZ) governor Gideon Gono knew months ago that several distressed banks were beyond redemption and put in place contingency measures to form a new banking

group, Zimbabwe Allied Banking Group (ZABG), out of their ashes.

Despite his repeated assurances that no bank would collapse, information gleaned from central bank sources shows that the RBZ had been planning months ago to form the ZABG by merging collapsed banks. Gono last month told a parliamentary portfolio committee that no bank would fold but information to hand indicates that by then he was already taking steps to form the new special purpose vehicle (SPV).

The SPV will warehouse government shares in the new group which is likely to emerge from seven closed banks, which include Trust, Royal, Barbican, Intermarket, Time, Rapid and First National Building Society.

The RBZ last Friday announced the registration of ZABG and another SPV company, Allied Financial Services (AFS), through the takeover of shelf companies Tidestock Investments and Cobsdale Trading (Pvt) Ltd respectively.

Ellen Cherai and Orippa Mawire of Network Secretarial Services (NNS), which registered the two companies, confirmed that the firms were registered between July and August.

They also confirmed that they were in the process of changing the companies’ names to Alliance Financial Services Ltd and ZABG.

While investigations by the Zimbabwe Independent found no ostensible link between the founders of the two hitherto-insignificant companies and the central bank, last Friday’s legal notices disclosed a connection.

The legal notices published in the press announced Tidestock and Cobsdale’s intention to change their names to assume the names of the two RBZ SPVs.

Authoritative banking sector sources said the plan was hatched some three months ago, suggesting that Gono anticipated current bankruptcies.

Gono is said to have discussed with stakeholders the formation of ZABG along the lines of South Africa’s Amalgamated Banks of South Africa (Absa) which controls the Jewel Bank.

Gono has been under pressure over his assurances that the closed banks would not collapse despite evidence that their balance sheets were in parlous positions. Some critics have charged that he might have misled the public when he insisted that the banking sector was largely stable when seven financial institutions were subsequently shut down.

Most of the closed banks, especially Trust, have hugely negative balance sheets. Their liabilities far outstrip the value of their assets.

Gono sank about $500 billion in a bid to save the collapsing banks, in vain.

Now he will need $2 trillion to capitalise ZABG, an amount which represents 25% of the national budget.

Recent Posts

Stories you will enjoy

Recommended reading