RBZ stalls ZB merger

Published: 17 December 2013

ZB Financial Holdings (ZBFH) says a delay in Reserve Bank of Zimbabwe (RBZ) approval is stalling plans to merge its banking arm and mortgage lender, ZB Building Society (ZBBS).

The group intends to combine ZB Bank and ZBBS as part of strategies to comply with the central bank's revised minimum capital requirements and also streamline operations to contain costs.

"We hit delays along the way, but it's (the merger) still on," ZB Bank's acting managing director Shadowsight Chiganze told businessdaily last week.

"Strategically there is no going back on that. We just went through board routines and it was affirmed.

Our plan will pull through once regulatory concerns at different levels have been done," he said, adding that "there is no doubt that there is so much complementarity that exists between the two business units.

There is no point in replicating particularly in terms of infrastructure and resources.

"It is also meant to address our capital issues in line with what the RBZ was talking about."

In August last year, former RBZ governor Gideon Gono ordered banks to up their minimum capital — in a phased manner — to $100 million by June 2014.

In the first phase, the banks were supposed to have a minimum capital of $25 million by December 31, 2012, then increase to $50 million by June 30, 2013 and $75 million by end of this month.

However, following failure by several banks to comply with the initial phase on the back drop of an acute liquidity crisis among other challenges, he hinted that the central bank may extend the June 2014 to a later date.

Gono also cited low economic growth as a contributing factor.

The ex-central bank chief indicated that in the interests of maintaining financial stability, the apex bank would continue to monitor the performance and conduct of banking institutions and efforts to address capitalisation, corporate governance and other regulatory issues in the sector will continue.

"Banking institutions are urged to ensure that their operations are conducted in accordance with sound administrative and accounting practices and procedures, adhering to proper risk-management policies and in compliance with all banking laws and directives issued," he said.

Meanwhile, market analysts blame the collapse of local indigenous banks on the worsening liquidity crunch and the tough economic environment prevailing in the country.
- dailynews