MOST banks will likely not meet a Reserve Bank of Zimbabwe (RBZ) deadline to shore up their capital requirements and repay RBZ loans by September 30, it emerged this week.
The banking sector is still struggling to regain balance after tremors caused by RBZ governor Gideon Gono’s monetary policy initiative introduced last year.
By the end of September all commercial banks will be required to have a capital requirement of $10 billion, merchant banks $7,5 billion, and finance houses $7,5 billion. Building societies and discount houses will be required to raise their capital adequacy ratio to $7,5 billion and $5 billion respectively.
The RBZ also wants those banks that received a life-line through the Troubled Banks Fund to have repaid their loans by the same deadline.
Sources said several banks were still facing liquidity problems. This was highlighted by last week’s placement of Royal Bank under curatorship.
Royal joins Barbican Bank, which was placed under a curator earlier this year for bankruptcy. Troubled Intermarket Holdings’ banking division, its building society and discount house were also recently placed under curatorship. But Intermarket Building Society has since been removed from curatorship.
Out of Zimbabwe’s 41 banking institutions before December 1 last year, six are now under curatorship, two under liquidation and four on life support through the Troubled Banks Fund. But sources say several banks are virtual shells waiting to collapse.
The sources said the only solid banks were the traditional international institutions such as Standard Chartered, Barclays and Stanbic, as well as a few local ones such as Jewel Bank, Zimbank, NMB and Kingdom.
Recent rankings of banks by the RBZ showed that there were only six out of 17 commercial banks rated as “strong”. One building society out of five, CABS, was rated as “strong”.
Banks such as Trust, Century, Metropolitan, Intermarket and Barbican were saved from collapse through the RBZ’s Troubled Banks Fund which advanced them almost $500 billion in liquidity support. It is understood that Trust’s debt to the RBZ has since ballooned from $208 billion to $1,5 trillion. Sources said it was likely taxpayers’ money was going into a bottomless pit as some banks were unable to recover.
Analyst John Robertson said the whole sector was still facing serious liquidity challenges. “Overall, the financial sector is not yet stable. The difficulties that beset most banks a few months back are still there,” he said.
“There are still banks in the market that have liquidity problems. As the deadline draws near we might see weaker banks courting stronger ones for possible mergers.”
Robertson said contrary to Gono’s claims that the sector was stable, the situation on the ground showed most banks were still shaky.
“Most banks are likely to struggle to repay their loans to the RBZ. The sector has not recovered because the economic fundamentals that caused their problems are still the same,” he said.
Gono refused yesterday to shed light on the situation, saying he had already explained the issues.
“No, no. I spoke to the nation a few weeks ago. Please refer to my statement. I can’t be speaking to the press everyday. No! That cannot be,” he said.
Many banks have not been able to access loans offshore because of weak fundamentals in the economy and the country’s poor credit rating.