Banned banks bounce back

THE Reserve Bank of Zimbabwe (RBZ) on Friday licensed three banks that were merged to form the Zimbabwe Allied Banking Group (ZABG) to resume their operations independently.
The licences would be effective on Wednesday.

The move effectively brought to an end a five-year battle for assets between the RBZ and the owners of the institutions.

The assets were “sold” to ZABG in 2005.

Banks’ registrar Norman Mataruka met representatives of ZABG, Royal, Trust and Barbican on Friday where licences were issued and an agreement struck that assets would be returned. It remains to be seen if Century/CFX Bank will be returnd to ENG Capital since it was sold under similar circumstances

According to a joint statement signed by representative from RBZ, ZABG, Trust, Royal and Barbican, the handover-takeover process would result in the unbundling of ZABG into four banking institutions: ZABG, Barbican Bank Limited, Royal Bank Zimbabwe Limited and Trust Bank Corporation Limited operating as separate banking entities.

“For the avoidance of doubt, ZABG retains its banking licence and all outstanding litigation issues have been resolved amicably,” the statement said.

The licensing of Trust, Royal and Barbican followed an agreement reached between Finance minister Tendai Biti and RBZ governor Gideon Gono for the return of the three institutions.

Biti told Standardbusiness early this month that he had written to RBZ instructing them to go ahead and issue the three institutions with licences.

“The government and the central bank agreed to issue licences to Trust, Barbican and Royal,” Biti said.
Founders of the three banks felt that the RBZ had erred in taking over their assets.

The three institutions ran into financial problems in 2004 and were put under curatorship as a way of trying to revive their operations.

When curators reported that the institutions were beyond redemption, they were amalgamated into ZABG which commenced operations on January 31 2005.

At the time RBZ claimed it had taken such drastic measures to protect the economic interests of depositors and to avert “a fully-fledged systemic financial crisis” which would have dealt a devastating blow to the Zimbabwean economy.

Trust and Royal approached the Supreme Court which ruled that that the “selling” of its assets to ZABG was null and void.

A panel, chaired by former High Court judge George Smith was set up to hear the appeals from Trust and Royal. The panel dismissed the appeals.

Until the latest developments, Royal and Trust founders had indicated that they were scouting for partners who would come in once the institutions had licences.

At a meeting in June, Trust Holdings Limited (THL) shareholders approved the process of recapitalisation by inviting new partners into the company.

THL directors were empowered to “select and engage prospective partners with the necessary technical, financial and strategic fit, subject to the terms and conditions of engagement being approved prior to implementation, by members sitting in a general meeting”.

THL is the parent company of Trust.

BY OUR STAFF

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