INTERFIN Banking Corporation could come out of curatorship and re-open its doors to the banking public, as it emerged this week the central bank wanted to re-open the institution.
While it was not immediately clear if the curator had secured an investor for Interfin or if some of the bank’s depositors had accepted an offer to convert their funds trapped in the bank into equity, Reserve Bank of Zimbabe governor Gideon Gono said Interfin would recover in a short while.
However, people with exposure to Interfin told businessdigest this week they had rejected an offer to convert their millions locked in Interfin into equity.
“We have rejected the debt-to-equity conversion deal as we are creditors who purchased banker’s acceptances and are not depositors,” a creditor with an exposure to the bank said this week.
Asked to comment on whether he was aware of Gono’s plans to reopen Interfin, the creditor said: “We were told the very day Interfin was put in receivership that they would open the bank soon, once a few things are done. I have no idea what is happening behind the scenes.”
Another institution affected by the Interfin debacle also said it had also rejected the same offer.
This comes at a time National Social Security Authority (Nssa) has expressed strong reservations against engaging in another debt-equity swap after entering a similar deal with Renaissance Merchant Bank (RMB) early this year.
Sources close to the developments at Interfin said it was unlikely that Nssa would agree to a transaction similar to the one used to save RMB.
“When one looks at Nssa’s decision to take over RMB, it was predicated upon the institution realising there was value in Afre. The business is closely allied to Nssa’s operations and the property investment portfolio is sound,” the source said.
But Gono told delegates at the 43rd edition of the Institute of Bankers’ Annual Winter Banking School held in Nyanga two weeks ago there was a plan to re-open the bank.
However, he did not give details on whether an investor had committed funds to the bank, which has a negative capital position of US$105 million according to the central bank’s investigations which led to the institution being placed under the “recuperative” care of a curator.
Gono made the remarks in responses during a plenary session of the school in which delegates asked whether the country was not going to experience a new wave of bank failures reminiscent of the 2004 scenario.
The central bank chief was also asked whether or not the deposit protection mechanism under the recently enacted Deposit Protection Act was appropriate and sufficient to compensate depositors of recently-failed institutions such as Genesis Investment Bank and Interfin.
“To the extent that you have used Genesis bank as an example, if I zero-in my response on it, you will find that the situation at Genesis was ok because at the time they surrendered their licence, the total deposit base was about US$1,5 million which was less than 0,0001% of the total deposits in the banking sector. So it was systemically insignificant,” Gono said.
“But if you analyse the make of the liability you find that 80% was owed to two institutions; Nssa and another bank. The remaining 20% was owed by way of deposits to a hundred or so depositors. The highest depositor had a deposit of around US$1 000 and that was a member of the Affirmative Action Group.”
Gono said the bank had exited the banking sector in an orderly way.
“Two banks have been placed under recuperative curatorship. That was a signal to the curator to say you are going in there to resuscitate this bank so that it becomes operational again. So as you know Renaissance was placed under curatorship last year and has since emerged from the situation and is now trading. Interfin Bank will soon be up and running and so forth,” he said.
“What was required is that there ought to be surgeons of a sufficient depth and knowledge and the surgical tools to carry out the surgical work required to resuscitate the bank. So just like some take longer and others take a short while, I have every confidence that the one bank that is under curatorship right now will recover in a short while.”