Jeniffer Dube
10 November 2009
THE Reserve Bank of Zimbabwe (RBZ) is revoking Legend Asset Management's (Lam) licence following the firm's failure to comply with set minimum capital requirements.
LAM becomes the first victim of the RBZ's enforcement of newly imposed capital requirements for financial institutions amid revelations that 23 out of the country's 26 banks met the criteria by the October 31 deadline.
However, the banks that have failed to comply with new requirements on time -- CFX, ZABG and NDH -- were given another grace period after they embarked on capitalisation strategies.
RBZ governor, Gideon Gono on Friday told journalists that the asset management company, which has been operating under a Corrective Order for the past year, had failed to raise the minimum capital of US$250 000 set for the industry.
The company only had US$34 933, 02.
"The institution also failed to submit a plausible recapitalisation plan, despite ample opportunity having been availed to the sector," Gono said.
"In addition, Legend Asset Management Company failed to submit its prudential quarterly return as at September 30, 2009.
"The institution has also moved its principal offices without notifying the Reserve Bank and cannot be located. In view of the above, Legend Asset Management Company's licence will be cancelled after due process has been followed."
Gono said he will have to carry out an exercise of notifying his principals before cancelling the licence. The decision cannot be vetoed.
The other 16 Asset Management firms operating in the country have met the requirements.
The RBZ early last month embarked on a capital verification exercise to ascertain the capital position of all banking institutions operating in the country.
The exercise assessed adherence to the prescribed minimum paid-up equity capital levels effective September 30. The final deadline is March 31 2010.
Commercial banks' minimum capital requirements were pegged at US$6.25 million for September 30 and US$12.5 million for March 31, 2010 while those of Merchant banks' were pegged at US$5 million and US$10 million respectively for the two periods.
Building Societies' minimum levels were set at US$5 million and US$10 million respectively while those for Finance Houses' were pegged at US$3.75 million and US$7.5 million respectively.
Discount Houses' minimum requirements stood at US$3.75 million and US$7.5 million respectively while Asset Management Companies' were pegged at US$0.25 million and US$0.50 million for the two periods respectively.
The RBZ extended the deadline from September to October 31 after only 16 out of the 26 banking institutions operating in Zimbabwe (excluding Intermarket Banking Corporation and POSB) had met the requirements.
"Now then, as at 31 October 2009, 23 out of 26 banking institutions had core capital complying with the prescribed minimum requirements," Gono said.
The seven banks at the top exceeded the minimum requirements for next March and these are Stanchart, Barclays, CBZ, Banc ABC, FBC Bank, CABS and Kingdom.
CFX, ZABG and NDH failed to comply.
"The RBZ is however satisfied that CFX and NDH will be adequately capitalised upon full implementation of the capitalisation strategies currently underway," Gono said.
"ZABG will be given more time to comply with the prescribed minimum paid-up equity capital requirements."
Toping the list on the asset management side is Kingdom with US$ 2 350 699 followed by ABC with US$717 000.
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