RBZ shuts down Time Bank

HARARE - The Reserve Bank of Zimbabwe (RBZ) has cancelled registration of Time Bank Limited, sending shock waves throughout a banking sector still recovering from a crisis two years ago that forced several banks and financial institutions to close.  Time Bank, put under curatorship by the RB

Z in October 2004, was a fortnight ago given a ray of hope when the central bank extended curatorship to June 30, 2006.
In addition, Justice Minister Patrick Chinamasa earlier this month lifted specification of the Time Bank’s directors and six companies linked to the bank, a move the market took to mean the way was being paved for the locally-owned commercial bank to resume operations.
But in a notice published in the official Herald newspaper on Saturday, the RBZ said: “Take notice that the Registrar of Banking Institutions has cancelled the registration of Time Bank of Zimbabwe Limited in terms of section 14 (1) (j) and (k) of the Banking Act (Chapter 24:20).” Time Bank was placed under curatorship following a probe by the RBZ, which showed the commercial bank’s balance sheet had a negative equity of  Z$174 billion.
But Time Bank was contesting the decision and claiming Z$400 billion from the RBZ which it said it was owed by the central bank and if paid would significantly alter its liquidity position.  Analysts view the latest twist on the Time Bank saga as reflective of the inconsistencies in policies between the government and RBZ. 
Two other troubled banks, Royal and Trust, recently lost an appeal against forced amalgamation into the Zimbabwe Allied Banking Group (ZABG), majority-owned by the state. But the banks could still appeal to Minister of Finance Herbert Murerwa according to Section 73 of the Banking Act.  Uncertainty has gripped the banking sector as a September 30 deadline to raise capitalisation to a new US$-linked minimum level fast approaches.  Commercial banks will be required to raise capitalisation to Z$1 trillion, building societies and merchant banks $750 billion, discount houses $500 billion and asset managers $100 billion.
Finance industry experts say many banks will not be able to raise capitalisation to adequate levels and some would be forced into mergers of convenience or would have to close shop. – ZimOnline

Post published in: Economy

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