Insurance sector capital requirements set for review

UNETHICAL banking practices at Premier Banking Group (PFG) came at a time when depositors were gaining confidence in the banking sector.

Bank deposits increased by 35% during the last quarter of 2009 from US$1 billion to US$1,35 billion.
The average industry monthly deposit growth was US$113 million, a 9% increase or 26% of GDP.
Loans and advances for the quarter during the period under review grew by 39,6%, while loans to deposit ratio increased from 55,2% to 57,7%.
Problems at PFG emerged at a time when the bank’s deposit had increased by 15,3% in 12 months, against a background of low incomes, low banking confidence, liquidity constraints and the absence of the central bank as a lender of last resort.
Premier’s deposits have increased from US$7,1 million in April to US$24,1 million in February this year under marketing guru Douglas Mamvura.
The group is projecting its deposits to reach US$30,6 million by the end of this month.
Premier bank’s loan to deposit ratio is about 48,9% and total assets worth US$19,258 249.
Analysts said the latest developments could scare away depositors at the bank which had gained a significant market share among merchant banks.
Sources at the bank said there was no evidence that approval was sought form the relevant credit committee/panel to extend the US$50 000 facility to Keltrade Investments.
“Despite insufficient details being provided by the client on application of facility (as raised by Credit, Risk and Corporate Banking management), the funds were paid out to the clients. This was done prior to perfection of security,” reads an audit in possession of businessdigest. “Draw downs were done from an unfounded account. The funds were paid out well after normal banking business hours at 17:15 yet normal business closes at 15:30 hours.”
According to the audit, the director of corporate banking Yona Banda and the executive director of investment banking Goerge Manyere authorised the funds to be drawn when they did not have the mandate and authority over loan facilities.
The risk manager could not sign owing to the inconsistencies of the whole transaction.
The investigation was at the request of the Bank Audit Committee following reports that the funds had been disbursed to the client in violation of the standing lending process and credit policy.
The group has so far this month embarked on a restructuring that has resulted in 42 of its 162 staff members retrenched.

Paul Nyakazeya