The Sunday Mail
Metbank and Tetrad Investment Bank are sitting on a knife edge, with the Reserve Bank of Zimbabwe under pressure from stakeholders who believe that monetary authorities should withdraw their licences to protect depositors.
There is anticipation that RBZ boss Dr John Mangudya will make a pronouncement on the two institutions in the next possible Monetary Policy Review.
Tetrad and Metbank have capitalisation of US$3 million and US$19,7 million, respectively, and have been struggling to meet obligations to depositors.
Banks in the Tier I strategic segment, in which the two institutions lie, are required to have minimum core capital of US$100 million by 2020 so that they can absorb the risk associated with the scope and complexity of their activities.
Tier II institutions should maintain minimum capital requirements of US$25 million.
Local banks that elect not to increase their capital to US$100 million will automatically fall in Tier II, which offers a limited product range.
Tier III has capital requirements of US$5 million (US$7,5 million by 2020) and comprises deposit-taking microfinance institutions.
Sources told The Sunday Mail Business last week that Tetrad and Metbank had been given up to Friday to show commitment fees from would-be investors.
“(Dr John Mangudya) will be issuing a statement on the two troubled banks when he releases his Monetary Policy Statement. For a long time they have been promising that their Mauritanian and Russian investors were ready to inject US$50 million each but nothing has materialised,” said a source.
Metbank boss Mr Ozias Bvute was not reachable for comment, but a senior executive who declined to be named said things were uncertain.
“To be honest with you, things are not well. If we are told to close shop, we will, but at the same time everyone knows that the economy is not performing. Why don’t you talk to the RBZ Governor,” said the executive.
Tetrad, which is under judicial management, has been linked to Russian investment group Horizon Capital Consortium Holdings.
Efforts to get a comment from the investor’s country representative, Dr Munyaradzi Kereke, were fruitless last week.
Dr Mangudya was not in a position to comment by the time of going to print, though earlier this year he said: “We need to find the resolution to cleanse the financial sector so that no one is incapacitated in doing business. We want to have banks which provide services. We are doing it in a sequential manner. We hope that this combination is going to resolve the problem. We are governed by principles, engagement and compromise to move forward.
“The whole idea is about removing bad apples. We are currently doing it and within 6 to 12 months we should be done with it. Even if banks are small, we are still concerned.”
Overall, the banking sector remains “adequately capitalised”.
First quarter figures from the RBZ indicated an average capital adequacy ratio of 18,6 percent against the minimum regulatory capital adequacy ratio of 12 percent.
In 1980, there were five banking institutions but financial reforms in the 1990s allowed more players to enter the scene and compete with large foreign-owned banks.
And by 2002 there were 40 players in the banking sector, many of which collapsed due to poor business practices.
Though the expansion was a welcome development, some of these have since failed and there are only 19 institutions remaining.
