Allied Bank sends 92% of staff home

Published: 26 June 2014

A STRUGGLING commercial bank owned by transport minister Obert Mpofu has put most of its staff on unpaid leave as it teeters on the brink of collapse, risking sector wide malaise.

According to Reuters news agency the undercapitalised bank has sent 92 percent of its workers home without pay until September in a bid to cut costs.

The bank, formerly ZABG, is struggling to raise new capital at a time non-performing loans now stand at 69 percent.

A bank spokesperson told Reuters: "The fundamental challenge for Allied Bank since inception has been the issue of inadequate capitalisation.

"The bank is implementing this voluntary unpaid leave scheme in an effort to contain operational costs, staff costs included."

Mpofu, widely believed to be one of the country's richest ministers, said he was not involved in running the bank.

He was handed the financial institution by former Reserve Bank of Zimbabwe governor Gideon Gono in 2012 after reportedly injecting about $23 million in new capital.

Confirming the deal at the time, Gono said Mpofu effectively rescued the bank from possible collapse after it had struggled to meet new minimum capital requirements.

"Dr Obert Mpofu ... came forward with his money and sought permission to take over ZABG bank which was ailing," RBZ chief Gideon Gono said in March last year.

"We gave him two years within which to regularise the ownership structure of that bank ... which he committed to do but for the time being he has put in money and is a 99,9 per cent shareholder."

However, the minister has not invested more money to support the bank and it has since been revealed that he did not acquire the institution for cash.

A confidential RBZ report leaked last year stated that: "properties contributed as capital by the major shareholder are yet to be transferred into the bank's name, notwithstanding the waiver granted by Zimra (Zimbabwe Revenue Authority) on the payment of capital gains tax."
- newzimbabwe