TROUBLED financial institution, Interfin Banking corporation (Interfin), is hopeful of a dramatic turn of events despite collecting a measly 1,57% of the US$107,2 million owed by debtors since it was put under recuperative curatorship by the central bank in June 2012.
Interfin chairman Timothy Chiganze recently told shareholders at the company’s annual general meeting that the poor collection was due to the country’s liquidity crunch.
“The debts recovery by the curator has been very slow due to the current liquidity crunch resulting in the bank being unable to accumulate enough cash resources to meet its operating expenses,” Chiganze said.
Company documents gleaned by businessdigest show that the bank’s collection rate has been very low as debtors fail to honour their obligations due to a myriad of macroeconomic challenges that have seen other banks grapple with high rates of non-performing loans, now averaging 20% which means over US$700 million, and companies shut down.
According to the documents, 262 summons valued at US$107,2 million were issued as at October 2014.
However, loans valued at US$1,7 million only had been settled in full whilst judgments in favour of the bank valued at US$67,5 million and accounting for 62,96% were obtained.
Another US$16,7 million worth of provisional sentences, accounting for 15,55%, were also obtained.
Currently, the bank is still waiting for judgments and provisional sentences on cases valued at US$21,3 million or 19, 92%.
As Interfin bank struggles with collections, the Reserve Bank of Zimbabwe (RBZ) has also indicated plans to put the struggling bank under provisional liquidation for three months effective January 2014. This will be after the lapse of the curatorship period next week.
Chiganze said the central bank in September 2014 initially recommended that Interfin surrender its licence for cancelation.
In a letter to the curator Peter Bailey, RBZ said surrendering the licence for cancellation would be in the best interest of depositors and creditors.
A board meeting held on October 28, 2014 noted that there were two potential investors keen to capitalise the bank.
As a result, the proposed cancellation of the bank’s licence became subject to Intefin’s failure to conclude these two proposals.
Chiganze said the bank was currently in discussions with one potential shareholder, Belle Holdings, which, according to Interfin MD Raymond Njanike, had made an initial offer to invest US$50 million.
Without giving more information on the identity of the potential
shareholder, Chiganze said Belle Holdings was requested by the RBZ to provide proof of funds and an irrevocable letter of commitment by 24 December 2014 after which the current curatorship period will be extended.
“If the conditions are met before 31 December 2014, or during provisional liquidation period, the liquidation would be stopped to allow the resuscitation of the bank, and hence there would be no need for the bank directors to surrender the bank licence,” Chiganze said.
He said the bank could still pursue settlement of debts by assets as opposed to cash only. As at November 2014, Interfin’s net asset
position stood at a negative US$166 million.