HomeBusiness DigestTwo more asset firms shut down

Two more asset firms shut down

Roadwin Chirara

THE Reserve Bank of Zimbabwe has shut down Renaissance Asset Management and Imperial Asset Management after concluding that the firms are immersed in financial problems.

The central bank raised concern over the operations of the two asset managers after they were found to have been operating outside the confines of their licences.

The closure of the two asset management companies brings to six the number of asset managers who have lost their licences over the past three months.

The firms were found to be in an unsound financial position and not operating “in accordance with sound administrative and accounting practices and procedures”.

Renaissance Asset Management and Imperial Asset Management had also failed to meet their minimum financial requirements.

Most of the closed asset managers are said to have failed to account for their incomes and whether the revenue generated had been derived through asset management operations.

The central bank is said to have also raised concern over the continued failure by the two institutions to comply with the set prescribed minimum financial requirements.

The RBZ however assured the investing public that the closure of Renaissance Asset Management did not mean the merchant bank would also cease operations.

The closure of Imperial and Renaissance comes after other financial services had raised concern over the operations of the remaining registered asset managers.

The problems in the asset management sector has been blamed on the regulations issued by the RBZ directing that asset managers could not hold huge chunks of investment in distressed productive sectors.

Operational measures of the central bank have resulted in operating asset managers recording low margins due to lack of business, with many surviving on transactions outside their licencing scope.

Until March this year, Zimbabwe had 31 registered asset management companies, but a hostile business environment and stringent operating guidelines have continued to claim scalps in the sector with four having already had their licences withdrawn.

These are First Factoring Asset Management, GP2 Asset Management, Mercantile and Sunshine Asset Management Company.

Under new regulations governing asset management firms, the RBZ requires companies operating in the sector to operate on paid-up share capital of at least $500 million, which should not be from borrowed funds.

At its peak in 2003, the asset management industry held 60% of Zimbabwe’s total deposits.

Asset management firms have been accused of being used as conduits for big banks.

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