Tetrad sinks under US$26m liabilities

TETRAD Investment Bank — which is under provisional judicial management — is technically insolvent as its total liabilities exceed assets by US$26,3 million and its cumulative losses scaled US$54 million by January this year as it faces imminent collapse unless prospective Russian investors provide an urgent bailout, its judicial manager’s report shows.

Kudzai Kuwaza

The bank’s provisional judicial manager, Winsley Militala, says in a report to creditors and shareholders presented to them on Wednesday this week its situation is now disastrous.

“The bank has continued to report significant losses since 2009 except for year ending 30 September 2011,” the report says.

“Accumulated losses as at 31 January 2015 stand at US$54 million.
Total liabilities exceed assets by US$26,3 million. These conditions, alongside other matters set out in this report, indicate the existence of material uncertainty which may cast doubt on the bank’s ability to continue as a going concern.”

The report comes at a time the bank is still engaged in talks with investor Horizon Capital Consortium Holdings (HCCH) for a US$50 million bailout package. The meeting between the bank and Russian investors was scheduled to be held yesterday after being postponed from last week.

It says while negotiations for a bailout go on, the bank must be placed under provisional liquidation to salvage remaining value for the benefit of its depositors and creditors. Depositors and creditors, however, gave the bank one month to conclude talks with HCCH after which it faces liquidation at the end of its two-month provisional judicial management.

The report further paints a desperate and even catastrophic picture of the situation.

“As a result of being undercapitalised, as evidenced by the negative core capital of US$38,2 million, the bank’s financial position was inadequate to cover the risk to which it was exposed,” it adds. “As a consequence, its customers lost confidence in its continued solvency as well as its ability to protect depositors against loss of their deposits.”

The report says the bank failed to adequately protect its assets, earning capacity and reputation as evidenced by high levels of non-performing loans (NPLs).

“Best practice would have seen strong internal controls system and appropriate corporate behaviour form the basis for effective, entrepreneurial and prudent management of the bank’s affairs,” it says. “Normally the board of directors, the board’s risk committee and the audit committee perform the central role in management oversight. In the case of the bank, the situation obtaining on the ground was a case of overbearing owner-managers calling all the operational shots and by-passing control measures at times. Two of the owner managers sit on almost all board committees with most of the non-executive directors having resigned.”

The report says 99% of the bank’s loan book comprises NPLs, 40% being unsecured loans amounting to US$25,1 million, while 30% is made up of loans to related parties amounting to US$19 million, the majority of which are unsecured.

The report indicates that because 99% of the loan book, which is US$62 million, was considered non-performing, the bank had to rely on only 1% of the book to generate interest income to fund its operations.

“The significant percentage of the bank’s loan book is unsecured. I note that related party loan balances (US$19,1 million) account for 76% of the unsecured loan balance (which is US$25,1 million) as at end of year 2014, with no security to recover these balances,” it notes. “In addition to this, the majority of the security held against the secured portion of the loan book has been used by the bank to further secure its own borrowings and customer investment deposits.”

The bank understated the exposure by some US$12,9 million when it declared US$19,1 million instead of the US$32 million that became apparent, it adds.

The report expresses concern that the placement of cash with Metbank (US$8,42 million) and Ecobank (US$4 million) was in fact cash cover required by the two banks to guarantee loans granted to Tetrad Holdings amounting to US$12,42 million.

It also says Tetrad last signed audited accounts in 2012. The statutory financial statements for 2013 and 2014, it says, had not been signed off by the auditors. The 2013 financials had not been signed by the auditors because of non-payment of audit fees, it adds.

“The banking regulation requires that banks publish their financial statements no later than three months after the financial year-end.

This has not happened for the past two consecutive years,” the report says. “The loan balances amounting to US$25,2 million are unsecured representing 40% of the book while 50% of the loan book is secured with properties. These properties are not sufficient security as their values are lower than the debt they secure leaving the bank exposed. It is therefore the provisional judicial manager’s considered opinion that the bank should be placed under provisional liquidation in order to salvage the value that remains at the bank for the benefit of its depositors and creditors.”

Several banks, including Capital, Allied and AfrAsia, closed down recently while a number have collapsed since 2000 due to liquidity problems, mismanagement and protracted economic challenges.

6 thoughts on “Tetrad sinks under US$26m liabilities”

  1. Confused says:

    So the truth now starts slowly to emerge. Only last week this paper reported that HHC were due to arrive and soon there after would be holding meetings about their rescue operation. Now it is reported that HHC have still to meet. Have they even arrived or do they actually exist? Does this paper just print press handouts which mislead?

    1. We are Elvin Loan Company located in London and other Europe countries, we offers both personal and investment loans to meet your needs and demands, We also render both secured and unsecured loan services for debt consolidation,unexpected expenses Or home improvement, business, Project and more. Our services is cheap and affordable at the annual interest rate of 2%.

      We will send you more details as soon as we receive your loan request.
      For more information, elvinloancompany@yahoo.com

  2. Courtney Bieneman says:

    Hello everyone, My name is Courtney Bieneman and i am talking as the happiest person in the whole wide world today and i told my self that any lender that rescue my family from our poor situation, i will tell the name to the whole wild world and i am so happy to say that my family is back for good because i was in need of $186,000.00 USD loan to start my life all over as i am a single mum with 3 kids and the whole world seemed like it was hanging on me until i met this GOD sent loan lender that changed my life and that of my family, a GOD fearing lender, Mr Mason Diego, he was the Savior GOD sent to rescue my family and at first i thought it was not going to be possible until i received my loan of $186,000.00 USD on the 5th/Mar/2015 and i will advise anyone who is in genuine need of a loan to contact Mr. Mason Diego via email at: { diegoloancompany@yahoo.com } because he is the most understanding and kind hearten lender. thanks..

  3. Hello applicant

    I am Mr. Campbell Reid and i give out loans at an interest rate of 3% and i am a real and legit lender who give out all kinds of loans you need.

    If interested in the offer, contact us today at reid3133@gmail.com.

    Campbell Reid

  4. Pon Yee Cash says:

    Dear Sir/ Madam

    Are you interested in obtaining a loan at an interest rate of 3%, you

    need a loan for a business transaction, buying a car, house

    purchase bad credit card and other E.T.C we give out long terms loan

    for five to fifty years maximum with 3% interest in
    Maybe you like it

    well tell us the amount you need so that we will send to you the terms and

    provided that, if you’re really interested in getting
    loan from us,

    Loans issued in Great British Pounds and U.S. dollar.

    We can give you the best satisfaction in getting a loan from us. as

    given guarantees and insurance that you will get your loan amount in your

    Personal bank account in your country. What takes only 48 hours

    Banking process. We also provide software and
    unsecured loans for

    Running your business. you can kindling reach us via < ponyeefastloan.ch@cash4u.com << <<

  5. Mr Robert Maxwell says:

    Mr Robert Maxwell
    Welcome to Mr Robert Maxwell Loan Company.
    Company (A Personalized Service for All Your Financial Needs) We,
    centraco Loan Service Providers offers
    loan at a very low interest rate of 3%, we offer Personal loans, Debt
    Consolidation Loan, Venture Capital,
    Business Loan, Educational Loan, Home Loan, and Loan for any reason
    and urgent needs!. with a maximum duration of 10years. Have you been
    turned down by your banks? Do you
    have bad credit? Do you have unpaid bills? Are you in debt? Do you
    need to set up a business? Worry no more as we are here to offer you a
    low interest
    loan. Our loan ranges from $2,000-USD to $50, 000,000.00. We also lend
    FORWARDED TO THIS EMAIL: Email:robertmaxwellloanlender121@gmail.com

    * Full Name:………
    * Country:………
    * State:………
    * Address:………
    * Age:………
    * Gender ……….
    Marital status:………
    * Next of Kin:………
    * Loan Amount Needed:………
    * Purpose of loan:………
    * Loan Duration:………
    * Monthly income:………
    * Mobile / Cell Phone:………
    Mr Robert


Comments are closed.