THE Reserve Bank of Zimbabwe has applied for the liquidation of Royal Bank after the troubled financial institutions' recapitalisation initiatives failed to materialise. Central bank governor Dr Gideon Gono said
last week the "protracted" nature and eventual collapse of the recapitalisation initiatives left the bank in an awkward position, where it was neither under curatorship nor under liquidation, at a time when the creditors' funds remained locked up in the bank.
"In view of this and the need to ensure an orderly exit of the bank, the Reserve Bank has since appointed a provisional liquidator and duly lodged an application with the High Court to this effect," said Dr Gono.
Royal Bank surrendered its licence in July last year after facing serious operational challenges including undercapitalisation, chronic liquidity challenges, high levels of non-performing loans, perennial losses and poor board and senior management oversight.
At that time, the bank's total deposits amounted to US$5,6 million which constituted 0,13 percent of total banking sector deposits of US$4,18 billion as at July 27 2012.
Royal Bank was founded in 2001, but three years later, the central bank closed it together with Barbican Bank and Trust Bank for engaging in non-permissible activities. The banks were later merged to form Zimbabwe Allied Banking Group.
In September 2010, the RBZ re-issued the commercial banking licences of the three banks and Royal Bank reopened in February 2011, but struggled to raise the US$12,5 million minimum capital required then for commercial banks.
Royal Bank will become the second bank to be placed under liquidation. Genesis Investment Bank surrendered its licence in June last year after failing to meet minimum capital requirements. The bank is now under liquidation.
This follows the granting of a final order by the High Court on November 8 last year.