BARELY a month after the collapse of its merger negotiations with South Africa’s Nedcor, the Reserve Bank of Zimbabwe (RBZ) has advanced Trust Bank Corporation $6,5 billi
on as liquidity support.
The central bank has so far advanced Trust Bank $640 billion.
The RBZ has now seconded full time staff to Trust Bank to try and reverse the fortunes of the troubled institution.
Over the past two months, Trust Bank has been engaged in consultations over a possible merger with South Africa’s Nedcor.
The merger talks collapsed three weeks ago when the South African-owned bank, which is controlled by Old Mutual Ltd, indicated it was no longer interested.
Trust Bank spokesperson Sure Chimbga said there was nothing unusual about securing funds from the central bank.
“There is nothing unusual about the bank getting extra funds from the central bank,” he said. “Banks go to the central bank when they are short.”
Sources said the $640 billion advanced to Trust Bank would likely be converted into equity.
The debt conversion option has been given to the bank to allow it time to explore other possible technical partners.
Although the deal with Nedcor collapsed, the RBZ has expressed optimism that a solution to Trust’s fortunes would soon be found.
Old Mutual’s unceremonious exit from the crucial talks has apparently exposed Trust Bank.
Old Mutual intended to buy into the bank through MBCA, a merchant bank in which the insurance giant has interests, but pulled out of the talks after it emerged that Trust books were a shambles.
Had the deal with Old Mutual gone through, Trust would have become the nation’s largest financial institution.
A due diligence report on the deal revealed that Trust’s debt to the RBZ had skyrocketed to $645 billion over the past four months.