Maputo, Mozambique — Mozambican Finance Minister Luisa Diogo Wednesday assured the country that money held by depositors in the crisis-ridden Austral Bank was safe.

The Bank of Mozambique (central bank) intervened in Austral, the country's third largest commercial bank, on Tuesday by appointing a provisional Board of Directors to look after its affairs.

This was after the majority shareholder, a consortium headed by the Malaysian Southern Bank Berhard (SBB), pulled out, and announcing that it could not participate in re-capitalising the troubled bank.

Diogo told the Mozambique news agency that the key interests to be protected were, firstly, those of the depositors, and secondly those of the bank workers (including a large number of retired workers who depend on Austral for their pensions). She insisted that these interests would not be put at risk.

Austral, previously known as the People's Development Bank (BPD), was privatised in 1997, with SBB buying 60 percent of the shares. The state retained 40 percent.

According to the governor of the Bank of Mozambique, Adriano Maleiane, re-capitalising Austral required the equivalent of about 70 million dollars (and the pension fund requires another 80 million dollars). SBB refused to pay.

"We held the Bank's Annual General Meeting on Tuesday. "SBB said it could not participate in the re-capitalisation. The state was prpared to participate," said Diogo.

She said that the Central Bank's intervention was "temporary" and was designed "to restore discipline."

Diogo stressed it did not mean that the state intended to re-nationalise the Austral Bank. On the contrary, the government's policy remained one of privatising the commercial banks.

The provisional board would now investigate the affairs of Austral Bank, and ascertain the true state of the bank. Only when this work is complete, said Diogo, could future steps be decided.