Business / Companies
NSSA backs out of ReNaissance bail out deal
05 Jun 2011 at 10:30hrs | Views
THE National Social Security Authority (NSSA) says its prospects of investing in ReNaissance Financial Holdings (RFHL) were all but dashed when the Reserve Bank of Zimbabwe decided to place the struggling financial group's banking arm under curatorship.
RBZ governor Gideon Gono on Thursday placed ReNaissance Merchant Bank (RMB) under curator Reggie Saruchera, in attempts to save the financial institution from collapse after the founders had abused depositors' funds.
The central bank's investigations had unearthed a serious "assault" on corporate governance by the founding directors.
NSSA board chairman Innocent Chagonda told Standardbusiness the placing of RMB under curatorship had dimmed NSSA's chances of investing in RFHL.
"There is no need to acquire RFHL since one of its major assets is under curatorship," Chagonda said.
"It goes without saying that the request that had been made has been overtaken by events."
When NSSA was given a cabinet approved proposal to invest in RFHL, it said it would undertake a due diligence exercise on the group.
Management said a financial advisor would do the job expertly because according to sources, no one wanted to shoulder the blame if the deal backfired.
The problem for NSSA was going through the tender process to select the financial advisor.
"The process would have taken more time than the authorities wanted and the curatorship was the only route available," close sources said.
NSSA had been approached by Finance minister Tendai Biti to invest in RFHL and rescue RMB, which is technically insolvent with a negative capital of US$16,7 million blamed on financial improprieties by the founding directors.
Saruchera's brief stay would be to recommend solutions on how RMB could be resuscitated so as to attract suitors.
Saruchera becomes the first curator since the use of multi-currencies in 2009 while RMB became the first institution to be put under curatorship in nearly seven years.
Before Thursday, the then CFX was the last bank to be put under curatorship in December 2004. CFX came out of curatorship and later evolved in Interfin.
Saruchera has in the past been appointed liquidator of Gilbert Muponda-led ENG Capital and investigator of Mutumwa Mawere's empire.
RBZ governor Gideon Gono on Thursday placed ReNaissance Merchant Bank (RMB) under curator Reggie Saruchera, in attempts to save the financial institution from collapse after the founders had abused depositors' funds.
The central bank's investigations had unearthed a serious "assault" on corporate governance by the founding directors.
NSSA board chairman Innocent Chagonda told Standardbusiness the placing of RMB under curatorship had dimmed NSSA's chances of investing in RFHL.
"There is no need to acquire RFHL since one of its major assets is under curatorship," Chagonda said.
"It goes without saying that the request that had been made has been overtaken by events."
When NSSA was given a cabinet approved proposal to invest in RFHL, it said it would undertake a due diligence exercise on the group.
Management said a financial advisor would do the job expertly because according to sources, no one wanted to shoulder the blame if the deal backfired.
The problem for NSSA was going through the tender process to select the financial advisor.
"The process would have taken more time than the authorities wanted and the curatorship was the only route available," close sources said.
NSSA had been approached by Finance minister Tendai Biti to invest in RFHL and rescue RMB, which is technically insolvent with a negative capital of US$16,7 million blamed on financial improprieties by the founding directors.
Saruchera's brief stay would be to recommend solutions on how RMB could be resuscitated so as to attract suitors.
Saruchera becomes the first curator since the use of multi-currencies in 2009 while RMB became the first institution to be put under curatorship in nearly seven years.
Before Thursday, the then CFX was the last bank to be put under curatorship in December 2004. CFX came out of curatorship and later evolved in Interfin.
Saruchera has in the past been appointed liquidator of Gilbert Muponda-led ENG Capital and investigator of Mutumwa Mawere's empire.
Source - Zimbabwe Standard
