6 July 2018

Zimbabwe: Capital Bank Liquidation in Limbo

The liquidation of Capital Bank is yet to proceed four years after its licence was revoked amid concerns over rising costs being accrued against the financial institution to the detriment of its creditors and depositors.

Sources said this week salaries and debts owing to the various creditors and stakeholders are still owing with some shareholders having attached the bank's property to recover their money.

"The Reserve Bank has not taken responsibility. The bank remains in no man's land with neither the RBZ nor the DPC taking responsibility over the bank's affairs," a source revealed. "The bank is still being sued by creditors four years after it surrendered its licence. It is a serious cause of concern."

However, RBZ governor John Mangudya said the central bank was still waiting for the High Court to make a ruling on a provisional liquidation application.

"We are still waiting for the High Court determination for the provisional liquidation order. RFHL (Renaissance Financial Holdings) opposed the provisional liquidation and consequently the bank remained locked as a High Court order has not provided a set date for the case," Mangudya said.

He added that Deposit Protection Corporation (DPC) and RBZ have engaged Nssa (National Social Security Authority) to map a way forward.

"Nssa has engaged (Patterson) Timba's RFHL for them to agree on RFHL abandoning their litigation upon resolution of FML shares. On issues delaying the liquidation, let's not speculate, what I gave you is a fact," he said.

Capital Bank was formed after the sale of Renaissance Merchant Bank (RMB) and a controlling equity stake in Afre Corporation (First Mutual Ltd) to Nssa in 2012.

The bank failed to take off due to high non-performing loans and litigation from Renaissance Financial Holdings Limited, a vehicle representing the founders of RMB, resulting in Nssa failing to capitalise the bank as the shareholder.

As a result, Nssa, through the board of Capital Bank, surrendered the licence.

Sources close to the developments blame the Reserve Bank of Zimbabwe for failing to act on the liquidation.

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