HomeLocal NewsMangudya keen to prevent more bank closures

Mangudya keen to prevent more bank closures

RESERVE Bank of Zimbabwe (RBZ) governor John Mangudya says the central bank is increasing surveillance on struggling banks, as his office moves to avoid more bank closures and restore confidence in the financial services sector.

Taurai Mangudhla

Following the closure of a number of banks in recent months, the latest being AfrAsia Bank which lost its operating licence last week, Mangudya said the banking sectors’ reputation was at stake.

He said monitoring efforts would also be scaled up on all banks, even on institutions generally believed to be safe and sound.

“We do not want negativity and the central bank will engage shareholders of struggling banks to make sure their house is in order,” said the RBZ governor.

“In fact, we have begun talking to these shareholders because what we don’t want is to have more banks closed. Closing a bank is very painful to depositors and employees. It hurts the economy and we want to avoid that.”

Mangudya in late 2014 vowed to restore confidence in the banking sector through a number of initiatives, including one on one dialogue with struggling banks.

Based on Mangudya’s maiden monetary policy statement in 2014- which singled out Allied Bank alongside Tetrad Investment Bank (Tetrad), AfrAsia and Metbank, as struggling banks that were under the monetary authorities’ watch, Tetrad and Metbank remain in the red after AfrAsia and Allied Bank lost their licenses.

Tetrad was in November 2014 suspended from taking deposits and issuing loans until it completes a crucial recapitalisation exercise.

The bank has since been placed under judicial management after a number of potential investors failed to seal a deal with the banks’ owners. As at December 31 2014, Tetrad’s shareholder funds stood at a negative US$20 million.

Last week, the RBZ cancelled the operating licence of Afrasia after determining the bank was no longer safe, forcing shareholders retreated due to the bank’s huge liabilities of more than US$100 million, according to informed sources.

Recent Posts

Stories you will enjoy

Recommended reading