News Column

NSSA Gets Nod to Liquidate Capital Bank

May 21, 2014



THE Ministry of Finance and Economic Development has backed the National Social Security Authority's decision to wind up operations of its banking unit, Capital Bank, an official has said.

NSSA general Mr James Matiza said yesterday the ministry had advised the Reserve Bank of Zimbabwe that it supported the authority's decision to liquidate the bank.

NSSA owns 84 percent of Capital Bank with remainder held by Mr Patterson Timba, Mr Dunmore Kundishora and Mr Clementine Sidza through Renaissance Financial Holdings Limited.

NSSA assumed controlling shareholding in Capital Bank after injecting $24,2 million into the then Renaissance Merchant Bank.

NSSA then resolved to liquidate the financial institution and pay off all depositors, but later decided to go for liquidation after taking into account the bank's weak financial position.

Under liquidation, creditors will only share the available money and since the process would be court-based, no creditor could directly claim any payment from NSSA directly afterwards.

As at December 31, the bank had a negative funding gap of about $13,3 million and shareholders' funds had moved to a negative $17,3 million, according to the bank's accounts.

"The Finance Minister (Patrick Chinamasa) has written to the RBZ Governor (Dr John Mangudya) advising him that the position of NSSA should be carried through," said Mr Matiza.

"So what it means is the ministry is supporting NSSA's position to liquidate the bank."

No comment could be obtained from Dr Mangudya and Minister Chinamasa at the time of printing.

RFHL, through its lawyers Muza and Nyapadi, had implored the Reserve Bank to stop the liquidation arguing that NSSA was "not acting in good faith".

The Zimbabwe Banks and Allied Workers Union also questioned the liquidation decision considering that the authority could write off about $30 million which it says "does not make economic sense for an institution holding workers pensions".

RFHL said there was an appeal before the Finance Ministry filed by Mr Kundishona in which he challenged the agreement between the former curator of Renaissance Bank and other parties.

They had hoped in the event that the appeal was successful, control of the bank would revert to RFHL.


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Source: AllAfrica


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