KINGDOM Bank was last week forced to cede Treasury Bills worth $12 trillion to CBZ Bank to settle a debt following the intervention of the Reserve Bank of
Zimbabwe (RBZ), businessdigest can reveal.
Kingdom is one of the banks that have been hit by a severe liquidity crunch since November last year.The bank was heavily indebted to CBZ through inter-bank placements which were made between the two banks since December.
Sources within the two banks said CBZ and Kingdom were forced to convene a meeting last week by the central bank which demanded that Kingdom find a way of settling its debt before the RBZ takes up the matter.
“No one wants RBZ to resolve such matters as the methods it uses may very well be ugly for us as banks. So an amicable arrangement was reached between the two banks,” said a source at Kingdom.
The agreement was reached late last week. Kingdom public relations manager Farai Mpofu said she would call back with a comment but had not done so at the time of going to press.
“I do note with concern, however, that Zimind (Zimbabwe Independent) seeks comment now for this report and yet no corroboration was sought to the story you ran on the sector last week,” Mpofu said.
Efforts to get a comment from Kingdom Bank chief executive officer, Onias Makamba, were futile.
CBZ managing director John Mangudya would not be drawn into commenting on the arrangement.
“Those details are privy to CBZ and Kingdom. This is not to confirm that anything happened, but we are not in the habit of divulging inter-bank arrangements. They remain a private matter,” he said.
Most banks, including Kingdom have been experiencing a liquidity crunch since November after investing depositors’ funds in shares and other illiquid investments.
Seven banks have since been put under the investigation by the central bank to find out the root cause of their liquidity problems.
The central bank has hired Camelsa Chartered Accountants to probe Kingdom Bank, Zimbabwe Allied Banking Group (ZABG) Renaissance Merchant Bank and Genesis Merchant Bank.
Auditing firm, KPMG, has been appointed to investigate Metropolitan Bank and the People’s Owns Savings Bank (POSB). Barclays Bank’s books are being scrutinised by BCA, a local forensic auditing firm. Banks are accused of
investing depositors’ money in properties, foreign currency and shares.
No bank has so far openly denied this accusation. Privately some banks, however, claim that in many cases most of the shares they are accused of holding on the Zimbabwe Stock Exchange (ZSE) were acquired during the underwriting of companies that listed on the local bourse.
Kingdom’s liquidity problems has seen it owing RBZ over $3,5 trillion in overnight accommodation to the RBZ.
Last Monday, five banks — Kingdom, CBZ, Renaissance, Genesis and ZABG — failed to pay their statutory reserves to the central bank. CBZ and Renaissance managed to settle their debt a day later on Tuesday while ZABG had proposed to raise $3,6 trillion from the disposal of 8 550 541 Pearl Properties shares and 5 212 500 Zimre Property Investments shares.