Published by the government of Zimbabwe
Victoria Ruzvidzo
11 November 2009
Harare — The Zimbabwe Allied Banking Group (ZABG) will soon revert to its former owners, five years after it was established from the remnants of three banks that succumbed to the 2004 banking sector clean-up by the Reserve Bank of Zimbabwe.
Trust Bank, Royal Bank and Barbican Bank were in 2004 merged to form ZABG, a strategy adopted then to salvage the remains of the entities. Government, through the central bank, is the largest shareholder.
The ZABG story has now taken a new dimension with RBZ Governor Dr Gideon Gono announcing last Friday that the former owners would soon take charge of the bank.
ZABG however, would remain consolidated in its current form.
He had intimated a few years ago that Government would ease out of the bank at some point to allow for private investors.
The former owners have been given the first right of refusal.
"Regarding ZABG, the institution is being returned to the original owners, following compliance with various requirements on the back of ongoing discussions," said Dr Gono.
The original owners will be expected to inject fresh capital after the bank failed to meet the October 31 deadline by which commercial banks should have had minimum paid-up equity capital of US$6,5 million.
As of October 31, ZABG only had US$541 766. It would be given time to meet the minimum capital required.
In an interview, Dr Gono said the process to hand the bank back to the owners started in 2007.
"It became necessary that the possibility of former owners redeeming their shareholding be explored. The process of engagement with the former owners started as far back as 2007 and it has not been an easy road given the complexity of the technical issues that had to be dealt with.
"However, at this stage, while negotiations are still ongoing, parties are convinced that an amicable settlement is now well in sight giving monetary authorities confidence that the former owners will come in to adequately capitalise ZABG, particularly in the factual reality that Government is not at this stage in a position to set aside funds to capitalise ZABG," said Dr Gono.
The process has been fraught with lawsuits which seem to have now been resolved amicably.
Over the years Trust and Royal had been contesting their inclusion into ZABG as they sought to protect their stakes in the bank.
Having gone through the litigation route, the cases were dismissed by the High Court but the Supreme Court determined that the "sell" of Trust and Royal assets to ZABG was null and void.
The central bank, as an interested party, recused itself from the appeal process and appointed a panel of experts chaired by former High Court judge Justice George Smith. Other members were corporate governance guru Mervyn King, former Zambia central bank governor David Phiri, industrialist Pattison Sithole, management consultant Luxon Zembe and Institute of Directors executive director David Mutambara to audit the process.
The panel endorsed the stance that had been taken by the central bank.
Dissatisfied with the outcome, the former owners were given room to appeal to the Minister of Finance.
However, indications this week were that the process to return the bank to the owners was at an advanced stage.
What is left now are the corporate governance processes between the central bank and current minority shareholders "in order that the transition is smooth and protects the rights and interests of all parties".
ZABG has over the last few years spread its tentacles in Harare and other parts of the country.
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