THE Reserve Bank of Zimbabwe (RBZ)’s Registrar of Banking Institutions has cancelled Capital Bank’s licence. This followed a request by the banking institution for the cancellation of its licence after it became undercapitalised due to a liquidity crunch in the economy. The bank said its major shareholder, the National Social Security Authority (NSSA), was “no longer willing to inject additional capital into the bank”. As a result, it had become imperative for it to wound up, the 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,” a statement issued by the RBZ 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 levels of non-performing loans.”
Capital Bank was created from the collapse of Renaissance Merchant Bank, which NSSA bailed out to scavenge its property portfolio which was held through First Mutual Limited. Its interest in the bank remained lukewarm; soon after taking over an 84 percent interest in the financial institution, NSSA allowed the bank to suffer a liquidity squeeze, unwilling to further bail it out.
By December 2012, Capital Bank was capitalised to the tune of US$7,5 million, US$17,5 million short of the US$25 million the central bank had prescribed for commercial banks by December 2012. The bank was one of only two financial institutions whose recapitalisation plans were said by the RBZ to be in need of improvement. The lack of interest in Capital Bank by NSSA was understandable. The compulsory insurance scheme holds over 30 percent shareholding in FBC Holdings, which wholly-owns FBC Bank. FBC Holdings also owns FBC Building Society.
NSSA is also a 37,92 percent shareholder in ZB Financial Holdings, which owns commercial bank, ZB Bank, and mortgage house, ZB Building Society. The second shareholder in ZB Financial Holdings is the government with a 23,59 percent shareholding. NSSA also has a 10,48 percent shareholding in CBZ Holdings, which owns CBZ Bank, a commercial banking unit that recently swallowed Beverley Building Society, which it had acquired and changed to CBZ Building Society before the merger. Government holds a 16,08 percent shareholding in CBZ Holdings. Government has assigned NSSA to represent most of its investments on the Zimbabwe Stock Exchange. — Staff Reporter.