CENTRAL bank chief Gideon Gono has warned struggling financial institutions that they have until February 14 to meet minimum capital requirements or face closure.
Commercial banks are required to have prescribed minimum capital of US$12.5 million while merchant banks and building societies must have US$10 million.
According to the RBZ, Kingdom Bank, Royal Bank and Genesis Investment Bank were still to meet the capital requirements by December 31 last year while Renaissance Merchant Bank has since been placed under curatorship.
However Kingdom has since concluded a deal with Mauritius-based Afrasia Bank Limited (ABL) which will see injection of equity capital of $9.5 million in the Zimbabwean company while measures are also underway to secure additional capital of $10 million.
In a monetary policy statement presented Tuesday Gono warned that, having failed to meet several deadlines, there was no “prudential basis for the continued existence of” the under-capitalised institutions.
“All non-compliant institutions have up to 14 February 2012 tofinalise their recapitalisation initiatives or consummate their mergers and acquisitions,” Gono said.
“For the avoidance of doubt, all dispensations for compliance with minimum capital requirements granted to non-compliant institutions are hereby revoked with immediate effect.”
The RBZ chief said he was disappointed the shareholders in the struggling banks had resisted recommendations to go into mergers and other forms of consolidation in order to address the statutory capital requirements.
“The Reserve Bank granted several recapitalisation deadline extensions to allow for the finalisation of the various lethargic and protracted initiatives that were purportedly at various stages of implementation,” he said.
“We note as Supervisory Authorities, that these troubled banking institutions are conspicuously oblivious of the clear global trends towards consolidation among banks.
“Since 2005, the Reserve Bank has advocated for consolidations through mergers and acquisitions as laudable market-oriented solutions to troubled banking institutions.”
He said the RBZ would engage the institutions still undercapitalised by the end of February and ensure that all problems are dealt with “decisively in terms of the Troubled and Insolvent Bank Policy by no later than 31 March 2012.”
“It follows that, with effect from 1 April 2012, any banking institution that is not compliant with the minimum capital requirements shall not be allowed to conduct banking business,” he said.