The two banks were closed this week — Interfin for wanton abuse of depositors’ funds and Genesis for failing to raise the minimum capital requirement of US$12,5 million.
Nssa had US$15 million deposited with IBC and US$708 000 with Genesis. The authority also owned 10,02% of Interfin Financial Services’ total issued share capital as at May 31 2012.
Genesis surrendered its banking licence while Interfin was placed under curatorship. This means, should there be a rights issue to cover the minimum US$105 million required to save IBC, Nssa would be required to contribute at least US$10,5 million. As a result, Nssa might be forced to take additional shares in IBC.
This would be the second time within a year that Nssa has been forced to convert debt to equity. After the Reserve Bank unearthed problems at ReNaissance Merchant Bank (RMB) last year, Nssa ended up bailing out the bank and taking up more than an 80% stake in the bank in a US$24 million deal to salvage its losses. Apart from Nssa, Al Shams Global, a company linked to Indian businessman Jayesh Shah, is also exposed to the tune of US$22,8 million while the Ministry of Finance exposure is US$18 million. The POSB is also exposed to the bank.
According to sources, Nssa should have been prudent enough to consider new risk and protection measures following the dollarisation of the economy.