Tinashe Madava, Business Reporter
THE Zimbabwe Allied Banking Group (ZABG) says it is on the verge of agreeing a deal with an unidentified foreign investor to inject capital into the troubled banking unit.
The bank, owned by government through Allied Financial Services, was unbundled at the end of 2010 from an amalgamation of Trust, Royal and Barbican banks after their demise during the 2004 banking crisis. ZABG has operated without enough recapitalisation since then. The three banks won their assets back about two years ago. Trust and Royal have started operating.
Officials within ZABG said this week that the bank had finally found a foreign investor willing to take over the bank and inject fresh capital.
"Yes, I can confirm that we are in the process of finalising negotiations with a foreign investor who will take up equity in ZABG," said an official who declined to be named because he was not the bank's spokesperson. The official did indicate, however, that he had been given clearance to comment on the issue.
ZABG has been scouting for an investor for close to two years now, with indications that most investors had snubbed the group because of the uncertain political climate and indigenisation laws restricting foreign investors to a 49 percent stake in any local business.
The Financial Gazette's Companies & Markets understands that ZABG needs about US$27 million to cover the minimum capital requirements set by the RBZ. The RBZ has given a deadline of February 29 2012 for all banks to comply with capital requirements or find credible suitors. Reports last year revealed that ZABG had engaged regional and international development finance institutions, including some Chinese development banks, to recapitalise its operations. Officials at ZABG, however, neither denied nor confirmed negotiations with Chinese investors.
Meanwhile, Finance Minister, Tendai Biti, revealed last week that the economy was facing a potential financial sector crisis as a number of banks had failed to meet requisite capital requirements.
Without mentioning the banks involved, Biti said that there were a number of banks that had experienced problems due to a plethora of issues, one of them being the failure to meet obligations to the exchequer account.
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