AfrAsia creditors get partial payments

AfrAsia Bank Zimbabwe creditors will receive between 40 and 50% of what they are owed by the bank which folded earlier this year as liquidator Reggie Saruchera struggles to recover money it is owed.

Fidelity Mhlanga

Saruchera told creditors at the second liquidation meeting in the capital on Wednesday that the bank, which lost its operating licence in February this year, owed depositors US$43,3 million who will now be paid between 40 and 50 cents per dollar as it struggles to recover close to US$50 million from its debtors.

The bank is owed US$45 million by its debtors with 10 companies owing the financial institution a huge chunk of US$31,9 million.

Companies that owe the bank are former Reserve Bank of Zimbabwe governor Gideon Gono’s Lunar chickens, US$8 million, Monachrome Pvt Ltd, US$4 million, Zimglass, US$3,8 million, Riozim, US$3,4 million, The wattle company, US$3,1 and Zimbabwe Diamond Technology Centre, US$1,6 million,AfrAsia Zimbabwe Holdings ABZL, Drummond Ranching, Stir Crazy Investments, ABZL staff owe the bank US$2,6 million, US$2,5 million, US$1 million and US$1,5 respectively.

Monachrome and Zimglass are under judicial management, while Stir Crazy has been liquidated, casting doubts on the possibility of recouping the loans.

The financial institution’s total assets of US$39,2 million are a far cry from liabilities of US$ 59,2 million.

Apart from depositors, the bank also owes offshore lender who provided lines of credit amounting US$7,1 million and other liabilities amounting to US$8, 7 million. From the US$45,9 million debts, Saruchera said the bank can only recover US$13 million with US$22 million being qualified as impaired loans.

So far, the bank has recovered US$2 million and is expecting to recover up to US$6 million by year end.

“We have engaged estate agents to recover the property and so far we have collected US$2 million and expect to recover US$6 million by end of year,” Saruchera said.

The liquidator agent is in the process of finalising the disposal of MicroKing by year end to the tune of US$3,6 million.

The bank experienced high levels of non-performing loans which ballooned from 13% in 2012 to 82% in 2015.

The bank’s failure to recover these loans led to severe liquidity challenges and hampered its ability to write new business.

The institution’s demise was triggered by shareholder wrangles which resulted in loss of market confidence.
In 2008, there was a shareholder dispute pitting Nigel Chanakira and John Moxon of Meikels Africa Ltd.
The squabbles were eventually resolved by a demerger of Kingdom Meikles Africa Limited (KMAL) to create Kingdom Financial Holdings Ltd (KFHL) and Meikles Ltd in June 2011.

The demerger resulted in a capital reduction of US$12,5 million for the bank which weakened the bank’s financial position and resulted in the bank’s core capital tumbling to below the minimum regulatory threshold.

Despite AfrAsia Bank Ltd of Mauritius (ABL) having injected US$23,1 million into the bank between March 2012 and June 2014, the bank was hit by yet another shareholder wrangle between Crust Moon Investment, a company controlled by Nigel Chanakira, and ABL, resulting in Chanakira exiting the group in a share buyback transaction valued at US$27 million.

Deposit Protection Corporation chief Executive John Chikura slammed the regulator for failing to take decisive action when the bank’s core capital was dwindling to unsustainable levels.

In December 2013 the bank’s core capital was US$4 million before increasing to June US$ 18,3 million in 2014 against the required US$25 million.

By December 2014 the institution’s core capital plunged to US$6 million despite holding customer deposits worth US$43 million.

In April 2014, Zachary Wazara’s Spiritage Telecoms sued the bank for US$78 million for allegedly failing to observe its fiduciary duties to Valley Technology.

Stir Crazy Investment in November 2014 engaged the services of an interest research bureau to compute interest and bank charges raised by ABZL during the course of its facilities, which concluded that the bank had overcharged the client.

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