Maputo — For the first time in the history of independent Mozambique, a bank has been declared bankrupt.
Finance Minister Luisa Diogo declared the closure, as from Wednesday, of the country's only cooperative bank, the Credit and Investment Cooperative (Credicoop). She was acting on a proposal from the Bank of Mozambique's Banking Supervision Department (DSB) to the effect that Credicoop should be declared bankrupt and cease trading.
DSB director Helder Xavier announced the decision at a Maputo press conference on Wednesday. He blamed the bankruptcy on management problems, particularly the expansion of Credicoop's activities "beyond what a prudent management would have advised".
Credicoop was founded in 1994, and its initial nucleus included prominent businessmen such as Egas Mussanhane, and Alkis Macropoulos, and politicians such as former security minister Jacinto Veloso. However, some of the initial cooperative members drifted away, and by 2000 Credicoop was in deep trouble.
"As from 2000 the economic and financial situation of Credicoop became unbearable", said Xavier. "This led the DSB to demand that the institution provide sufficient funds of its own, by increasing its share capital".
But the recapitalisation demanded by the DSB never happened, despite promises by the Credicoop management. As a result the bank ran into acute liquidity problems.
The DSB then insisted on tough measures to clean up Credicoop's finances, in the hope that this could save the institution. But the medicine did not work, and there was no recovery.
"Credicoop was technically bankrupt", said Xavier, "which led the Bank of Mozambique to propose to the Finance Minister that its authorisation to trade be revoked".
Joana Saranga, the Bank of Mozambique director in charge of banking supervision and internal audits, said that Credicoop's current situation "is a failure to comply with any of the prudential ratios, and its own funds are negative".
She could not put any figures on this "because there's not been a valuation yet, but I can add that the Credicoop solvency ratios do not reach even eight per cent of what the Bank of Mozambique requires".
Liquidators will now be appointed. After they have begun work it is likely that a meeting of creditors will be held, and a full assessment of the Credicoop assets and financial situation will be drawn up. In the meantime, the Bank of Mozambique has ordered the chairperson of the board of the Credicoop General Meeting to ensure that the cooperative's assets are not touched, and that no alterations are made to its documentation.
