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RBZ could extend fund

Shakeman Mugari

THE Reserve Bank of Zimbabwe (RBZ) is likely to extend the Troubled Banks Fund after some institutions appealed to have their payback period for borrowed funds extended.

The fund, set up to bail out financially troubled banks, was due to expire on Wednesday.

This week however a number of indigenous banks are understood to have requested that they be given more time to pay off billions they owe the RBZ.

RBZ governor Gideon Gono refused to shed any light on how the central bank would treat financial institutions in a quandary after the expiry of the fund.

A statement is likely to be issued next week after some wide-ranging meetings between the troubled banks and the Reserve Bank.

“All we can say is that all the banks that were on this fund have made commendable progress,” said Gono.

He said the central bank is satisfied with the measures taken by the banks and would issue a statement next week.

Trust Banking Corporation, one of the troubled banks, is understood to have written to the central bank requesting a grace period.

Other banks also communicated their intention to reschedule their debt with the RBZ.

Trust was given a $223 billion lifeline but has so far managed to repay only $80 billion.

Trust spokesperson Sure Chimbga referred all questions regarding the loan to the central bank.

“We believe it would be improper for us to discuss repayment arrangements that Trust made with the Reserve Bank. We would however be glad to refer you to the relevant officials at the Reserve Bank for further assistance,” said Chimbga in a statement.

Metropolitan Bank is still struggling to pay off the $22 billion it owes the central bank.

Analysts say the Reserve Bank can no longer afford to withdraw from the troubled banks even if they delay their payments.

“The governor has already put in billions into these banks and if they sink then the central bank will bleed,” said a fund manager with a local securities company.

“There is $400 billion at stake and RBZ would have to keep pumping until they recover. If they withdraw now then they will lose.”

He said there was need for the Reserve Bank to keep its doors open for banks in financial distress.

“That facility has to be there in order to serve as a rescue package for the strained institutions,” said the fund manager.

Sources in the banking sector say the crisis could also hit other banks that have until now been perceived as stable in the market. There are also institutions that have not yet recovered from the liquidity crunch that has hit them.

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