Royal Bank depositors get 76% compensation

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THE Deposit Protection Corporation (DPC) has paid 76% of compensation to depositors of the defunct Royal Bank, businessdigest has learnt.

By Kudzai Kuwaza

DPC public relations manager Allen Musadziruma told businessdigest this week that they terminated compensation for Royal Bank, which is in liquidation, on July 31 this year and has paid out more than US$350 000 to depositors.

“To date US$357 054 has been disbursed to the depositors of Royal Bank out of the Deposit Protection Fund (DPF) paid against an exposure of US$472 207 at a cover level of US$500 per depositor. The said payment represents about 76% compensation of the insured amount,” Musadziruma said. “On the liquidation front, about US$663 904 has been paid out as dividends to Royal Bank preferred creditors only.”

Musadziruma said to date US$3,3 million has been disbursed to the depositors of the six failed banking institutions, namely Royal, Trust, Genesis, Allied, Interfin and Afrasia out of the Deposit Protection Fund (DPF) paid against an exposure of US$6,4 million at a cover level of US$500 per depositor per bank.

“The said payment represents about 51% compensation of the insured amount. Payments for depositors of these institutions except Genesis and Royal are still ongoing and we urge those who have not claimed their money from DPC to do so,” Musadziruma said.

He said on the liquidation, about US$18,2 million (US$7,5 million preferred and US$10,7 million concurrent creditors) has been paid out as dividends to creditors of the six failed contributory institutions under liquidation.

Musadziruma revealed that following the licencing of EmpowerBank Limited and Zimbabwe Women’s Microfinance Bank Limited, DPC now has a total of 27 contributory institutions to the Deposit Protection Fund.

DPC payments to depositors take place on two fronts. These are the DPF up to the prevailing cover level, currently US$1 000 (for new bank closures effective June 1 2016); and liquidation dividends on a pro-rata basis depending on debt recoveries and asset realisation.

The Deposit Protection Fund is established under Section 13 of the Deposit Protection Corporation Act (Chapter 24:29).

The primary objective of the Fund is to compensate depositors in full or in part, for losses incurred in the event of insolvency of a contributory institution.

The fund is vested in and administered by DPC.

DPC commenced operations on July 1 2003, and its primary objective is to provide protection to depositors in institutions licenced to operate banking or finance business in Zimbabwe such as commercial banks, merchant banks, building societies, finance houses, discount houses, deposit-taking microfinance institutions, People’s Own Savings Bank and Infrastructure Development Bank of Zimbabwe.

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