A Zimbabwe African National Union-Patriotic Front billboard calling for land and sovereignty. Mugabe won re-election on July 31, 2013., a photo by Pan-African News Wire File Photos on Flickr.
Trust Bank to be liquidated
December 30, 2013
TRUST Bank is facing liquidation after the Reserve Bank of Zimbabwe cancelled it’s banking licence over allegations of abuse of depositors’ funds and violation of the provisions of the Banking Act.Efforts to recapitalise the bank had all been futile and Trust was no longer safe and sound.
Yesterday, sources at the central bank said a High Court application had been made to order the liquidation of the troubled financial institution and if granted, the Deposit Protection Corporation will be appointed provisional liquidator in terms of the law.
“It is most certain that the bank will be thrown into liquidation and the Deposit Protection Board will be appointed provisional liquidator in terms of the Act,” said one source at the central bank. “If that is done, small depositors can be paid up to US$500 with the remainder being paid from the money raised through assets disposal.”
The closure of Trust marked the second time in eight years that the bank has lost its banking licence. Efforts to get official comments from the RBZ and DPC were fruitless.
Some of Trust Bank’s top depositors, according to insiders include the National Social Security Authority (about US$3,7 million secured), PTA Bank (US$2,5 million secured), one Dr Chitiyo (US$1,8 million unsecured, Mohamed Mussa (US$1,6 million unsecured) and Africa Export and Import Bank (US$1 million unsecured).
The RBZ said Trust Bank was financially unsound and was not operating in line with sound administrative and accounting practices and procedures. The bank, which was said to be critically undercapitalised with core capital of US$1,9 million, has been posting persistent losses since its banking licence was reissued in September 2011.
In terms of RBZ’s phased regulatory capital thresholds, commercial banks are required to have US$75 million at hand by end of this month and US$100 million by June 2014.
The institution has been facing critical liquidity challenges emanating from the poor loan book, inadequate working capital as well as gross abuse of depositors funds.
The central bank said maintaining Trust as a bank was no longer desirable in the interests of its depositors, members and creditors. The RBZ said Trust failed to maintain a base of net assets of a nature and amount sufficient to safeguard its creditors.
The bank, the RBZ found, could no longer maintain the prescribed minimum amounts of capital and reserves and was also accused of engaging in undesirable methods of conducting business.