Sources said this development was a follow up to a plan initially considered by the building society nearly two years ago when it started issuing cheque books to its platinum customers.
Questions sent to Cabs MD Kevin Terry were not responded to at the time of going to press.
“The building society first made an indicator to go into commercial banking two years ago when they started offering cheque books to their top-end customers,” a source close to the development said.
“We understand that this pilot project, if I may call it, failed because systems and controls were not adequate. The cheque system was also affected by the hyperinflationary period that was prevailing.”
CABS, a subsidiary of Old Mutual Zimbabwe, the largest life assurance company recently reintroduced long-term lending after a two-year suspension would require US$12,5 million to meet the statutory minimum capital requirements prescribed by the Reserve Bank .
The building society currently 100%-foreign owned is also expected to comply with indigenisation and empowerment regulations compelling such companies to dispose 51% interest to black Zimbabweans over the next five years.
Cabs through its associate company, MBCA Bank Ltd , also offers wholesale banking to its clients.
The soon-to-become commercial bank joins a handful of banks — Barclays, MBCA, Premier, NMB and Agribank — that reported losses during the first half of the year.
CBZ, the largest commercial bank in terms of assets posted a US$9, 8 million profit after tax during the same period ending June 30 2010.
Performance of the banking sector according to the Bankers Association of Zimbabwe, is hamstrung by a cocktail of challenges that include limited deposit base, low confidence, inadequate foreign lines of credit and inadequate lender of last resort function by the central bank.
Finance minister Tendai Biti in his bid to restore confidence to the system that was dented by years of unprecedented hyperinflation two years ago, last week announced that government would strengthen a Deposit Protection Scheme.
“In view of this, Government will support the mobilisation of resources towards the Deposit Protection Fund managed by the Deposit Protection Board. These funds are meant to recapitalise the Fund which had been decimated by hyperinflation”, Biti
“Furthermore, Treasury is in the process of reforming the Deposit Protection Scheme from being a “Pay Box” with limited powers under the Reserve Bank to an operationally independent corporation with an expanded mandate.”