Time/RBZ negotiate deal

Shakeman Mugari

THE Reserve Bank of Zimbabwe and Time Bank are negotiating to end their legal battle in which the commercial bank is suing RBZ for placing it under curatorship.



face=”Verdana, Arial, Helvetica, sans-serif”>Time Bank directors and senior RBZ officials recently met to negotiate an out of court settlement.


If concluded, the deal will allow Time Bank to open its doors to the public.

The private talks gained momentum two weeks ago after the central bank extended an olive branch to Time Bank directors in an effort to mend strained relations.


Sources said the negotiations were at an advanced stage. It is understood that the talks could have been influenced by Time Bank’s two legal cases against RBZ.


In the first case, Time is suing RBZ for bungling a US$15 million credit facility extended to the bank by PTA Bank in 2000. Time claims that RBZ charged a 70% interest rate instead of the 7% charged by PTA Bank. The bank is therefore demanding a whopping $400 billion as compensation.


The Reserve Bank has since admitted that it mishandled the transaction and is willing to pay Time Bank $200 billion.


“Please be advised that the RBZ is agreeable to the inclusion of 50% ($200b) of your claim ($400b) to the RBZ on the statutory reserves,” the central bank said in a letter dated February 12, 2002.


Stephen Gwasira, who was then the director of supervision and surveillance in the RBZ, wrote the letter to Time Bank. Gwasira is now the chief executive of the troubled Zimbabwe Allied Banking Group (ZABG).


The second case involves Time Bank’s High Court application challenging RBZ’s decision to place it under curatorship. Time was placed under a curator in October last year.


However, the bank says the decision was “unlawful, rushed and driven by predetermined motives”.


According to sources close to the talks, there are three alternatives on the agenda, which have been designed around Time’s $60 billion loan to RBZ under the Troubled Bank Fund (TBF).


The first alternative is that “upon the two parties agreeing on the proper valuation the bank’s (Time) assets, the RBZ may convert its Troubled Bank Fund loan (TBF) into equity”.


The second option, sources say, is for RBZ to convert part of its TBF loan to Time Bank into shares and allow the bank to pay off the outstanding amount.


The third option hinges on the outcome of Time Bank’s $400 billion claim against RBZ in the PTA saga. “Because the RBZ has already admitted that it will compensate Time to the tune of $200 billion, this means that if Time wins its $400 billion claim the equation would change,” said the source.


“Under this plan, the RBZ would have to pay $340 billion to Time after subtracting the $60 billion they are owed.”

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