Business / Companies
Seven Zimbabwe banks fail to meet capital requirements
05 May 2011 at 04:13hrs | Views
Seven banks have failed to comply with the US$12,5 million capital requirements amid calls from experts for the financial institutions to merge operations.
According to the latest financial sector performance report, the seven banks that are failing to comply with the central bank's capital thresholds comprise small and new players in the financial sector.
However, the report compiled by fiscal authorities has not disclosed names of the banks, citing the need to protect depositor interests.
An economic commentator, Mr Godfrey Dupwa says while the seven banks have not managed to comply with the requirements, it is in the interest of the relevant authorities to take note of financial challenges affecting banks by ordering the struggling institutions to merge operations.
"The only way for them to survive is to merge operations, otherwise it is likely to be a tough act," Mr Dupwa said.
While the report has noted that the financial sector is mainly dominated by four big banks that are controlling at least 60% of the total deposits, an economist, Mr Brains Muchemwa says the survival of the seven banks hinge on the extension of the capital requirements from June 30 to December 31 this year.
"We are likely to foresee a situation where the deadline will be extended to at least December 31 this year," Mr Muchemwa said.
Financial institutions around the country are focusing on recapitalising operations after the change from the use of the local currencies to a multiple currency system in February 2009 resulted in banks starting from zero deposit levels to the current US$2 billion.
According to the latest financial sector performance report, the seven banks that are failing to comply with the central bank's capital thresholds comprise small and new players in the financial sector.
However, the report compiled by fiscal authorities has not disclosed names of the banks, citing the need to protect depositor interests.
An economic commentator, Mr Godfrey Dupwa says while the seven banks have not managed to comply with the requirements, it is in the interest of the relevant authorities to take note of financial challenges affecting banks by ordering the struggling institutions to merge operations.
"The only way for them to survive is to merge operations, otherwise it is likely to be a tough act," Mr Dupwa said.
While the report has noted that the financial sector is mainly dominated by four big banks that are controlling at least 60% of the total deposits, an economist, Mr Brains Muchemwa says the survival of the seven banks hinge on the extension of the capital requirements from June 30 to December 31 this year.
"We are likely to foresee a situation where the deadline will be extended to at least December 31 this year," Mr Muchemwa said.
Financial institutions around the country are focusing on recapitalising operations after the change from the use of the local currencies to a multiple currency system in February 2009 resulted in banks starting from zero deposit levels to the current US$2 billion.
Source - Byo24News
