Capital Bank licence cancelled

Published: 06 June 2014

THE Reserve Bank of Zimbabwe has cancelled the banking licence of Capital Bank after the latter voluntarily surrendered it. This follows unwillingness on the part of the bank's majority shareholder, National Social Security Authority (NSSA), to inject fresh capital into the operations of the bank.

"Take notice that the Registrar of Banking Institutions has cancelled the registration of Capital Bank Corporation Limited as a banking institution with effect from June 14, 2014," the RBZ said in a notice yesterday.

The central bank has in the past cancelled the licences of Trust Bank, Royal Bank and Barbican Bank for failing to meet set requirements and abuse of depositors' funds.

Capital Bank, in its request to have the licence cancelled, informed the central bank that while it was undercapitalised, the majority shareholder, NSSA, had expressed unwillingness to inject further capital into the entity.

It also said in the absence of capital injection, the financial position of the bank dictated that it should close.

"The registrar is satisfied with the reasons for the request and that the cancellation will be in the best interest of the Capital Bank's creditors, depositors and members.

"The bank has been operating in an unsafe and unsound financial condition characterised by critical under capitalisation, persistent losses, chronic liquidity challenges and inordinately high levels of non- performing loans.

"As a consequence of the cancellation, Capital Bank Corporation Limited is no longer a banking institution. . .," the central bank said.

In 2012, NSSA snapped up an 84 percent stake in the then ReNaissance Merchant Bank (RMB) in a $24 million deal.

Initially, the bank was a wholly-owned subsidiary of ReNaissance Financial Holdings (RFHL) founded by businessman Patterson Timba and Dunmore Kundishora, among others.

Under the central bank's phased recapitalisation process, commercial and merchant banks are required to have a minimum capital of $100 million by June 2014.

In the first phase, banks were required to have a minimum capital of $25 million by December 31 last year, up from the initial $12,5 million.

Our Harare Bureau last November reported that NSSA was considering to write off over $30 million it invested in the bank.

The NSSA board resolved to discontinue the operations of the bank by paying off all creditors and depositors.

Former board chairperson of Capital Bank Joseph Kanyekanye told the local media last year that the bank was considering downgrading to a micro-finance.
- chronicle