HomeLocal NewsRBZ pays Time Bank US$10m

RBZ pays Time Bank US$10m

THE Reserve Bank of Zimbabwe (RBZ) has paid US$10 million in Treasury Bills (TBs) to the soon-to-reopen Time Bank in a bid to end a nearly two-decade-long dispute with the commercial bank which is eyeing an investment banking model before year-end.
Government’s total stock of TBs has surpassed the US$2 billion mark over the last two years amid concerns that this could crowd out private sector lending and force the central bank to adopt desperate measures as Treasury battles to meet its financial obligations on the back of economic implosion.

By Bernard Mpofu

Time Bank, which stopped its operations 17 years ago, was one of many institutions that were raided by the central bank as it embarked on quasi-fiscal operations at the height of the country’s hyperinflationary era.

Following years of animosity between former Reserve Bank governor Gideon Gono and Time Bank shareholders, incumbent central bank chief John Mangudya engaged in negotiations with the bank to settle the matter out of court.

Time Bank is one of the central bank’s many creditors which were owed a combined total of US$1,1 billion as of 2015.

The government in 2015 enacted a law to take over the RBZ’s debt — owed to banks, the private sector and non-governmental organisations — to remove the encumbrance and allow it to play its role as lender of last resort.

Sources said during the negotiations, Time Bank, which was owed US$30 million, agreed to forego US$20 million for a US$10 million payout although the bank has had to forego millions of dollars in potential income.

During the dispute, Time Bank claimed that vital information was stolen from the commercial bank when it was under curatorship, prejudicing the financial institution of US$30 million. The debt, sources said, had an interest rate of 5% per annum. It is also understood that the bank, which has been given the greenlight to operate, has plans to resume operations by June.

Sources said Time Bank is considering the investment banking route. Investment banking entails financing projects, assisting individuals, corporations and governments in raising capital by underwriting and/or acting as the client’s agent in the issuance of securities.

This week, Time Bank issued a detailed statement chronicling the prejudice it has suffered since its closure.

“The closure of Time Bank enabled the RBZ to avoid repaying the money due to Time Bank for a long period of more than 17 years. The recent resolutions of Time Bank comes after more than 17 years of an economic struggle for our rights including struggles for the refund of the money taken from us in 2000, our property rights in general, 13 years of struggle from 2004 to reopen Time Bank after the RBZ closed it unlawfully in 2006, and 8 years of struggle to enforce a court order of 2009 which reinstated the bank’s licence including a directive that Time Bank should be reopened immediately,” the bank said.

“From the above it is clear that the agreement made by the current RBZ governor (Mangudya) to refund Time Bank’s money, is the same agreement which former governor Dr L Tsumba had made. However, the RBZ under Dr Gono made a different decision and the reasons were questionable.”

After Time Bank’s closure, more than 10 000 employees lost jobs,” the bank said.

“We were disempowered at a time when others were empowered. We were punished severely by RBZ for standing up for our rights. However, the directors of Time Bank never ran away from the country. They decided to remain in the country and face the challenge,” the bank said.

In 2009, the Reserve Bank of Zimbabwe agreed to the restoration of the bank’s operating licence after the Administrative Court ruled its 2004 closure by the central bank was unlawful. The bank was placed under curatorship in 2004 and subsequently its licence cancelled in 2006, but the Administrative Court reinstated the licence in 2009.

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