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Zimbabwe : CAPITAL Banks licence cancelled by Zimbabwe

June 7, 2014

The cancellation of Capital Bank s banking licence, sowing fresh doubt into the stability of indigenously-owned banks in the country is declared by the Reserve Bank of Zimbabwe

Zimbabwe s financial services sector has been hard-hit by a constant liquidity crunch and depositor flight, with indigenously owned banks hardest hit.

The cancellation of Capital Bank s licence could encourage further negative response over the stability of the local banking sector.

A report by the Industrial Psychology Consultants launched this week stated that Zimbabweans favour international banks to deal with their funds.

SA s Standard Bank unit in Zimbabwe, Stanbic, and the British-owned Standard Chartered and Barclays banks were rated as the most favoured international banks by the report. "Only 24% of bank customers said they would want to stay with their current banks."

Undercapitalisation was the main reason for the licence cancellation. Capital Bank s major shareholder, the National Social Security Authority, is no longer willing to introduce additional capital into the bank.

The reserve bank said, "The registrar is satisfied with the reasons for the request and that the cancellation will be in the best interests of Capital Bank s creditors, depositors and members .

The central bank said, "The bank has been operating in an unsafe and unsound financial condition, characterised by critical undercapitalisation, persistent losses, chronic liquidity challenges and inordinately high non-performing loans .

Capital Bank joins a string of indigenous banks that have failed over the years that comprised Genesis Bank, Royal Bank and Trust Bank.

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Source: TendersInfo (India)

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