Business / Companies
11 Zimbabwe banks distressed
27 Aug 2014 at 10:24hrs | Views
The Depositors Protection Corporation (DPC) says it is closely watching 11 banks exhibiting signs of financial distress under the Capital, Assets, Management, Earnings, Liquidity and Sensitivity to risk (Camels) rating system.
The banks have a composite deposit ratio of $1,2 billion.
Zimbabwe currently has 19 operating banking institutions, comprising 15 commercial banks, one merchant bank and three building societies and one savings bank.
The Camels rating system is a tool used by governments to evaluate the safety and soundness of the banking sector, with each element rated on a scale of one, indicating the best performance, to five which indicates the worst performance.
DPC chief executive John Chikura told the Parliamentary portfolio committee on Finance on Monday that of the 11 financial houses, five were on the third rating while four are rated fourth, with two in category five, reserved for the worst performers.
"At this point we are not at liberty to disclose the names of the financial institutions as this will cause unnecessary alarm in the industry.
"What we can assure this committee and the banking public is that we are working flat out to ensure that depositors are protected in the eventuality of bank failures," he said.
Chikura said of the $1,2 billion deposits, at a cover level of $500, DPC was exposed to the tune of $52,3 million, which could affect 770 053 depositors.
The corporation's exposure to distressed contributory institutions was $16,9 million, representing 138 186 accounts.
The DPC said the depositor's protection fund is sitting at $14,6 million, representing 19,27% of the targeted fund. Of the total amount, close to $5 million is sitting with debtors and $9 million is invested in Old Mutual trust bonds.
DPC said with the current Fund, it could only manage to cover 1,2 million depositors out of about 1,4 million representing 87,3% cover from the desired 90%.
To date, DPC has only managed to compensate 6 911 depositors out of a total of 13 111 depositors from 2003.
"Three of the financial institutions had compensations during the Zimbabwe dollar era, namely Century, Rapid and Sagit.
"From 2012, we have managed to compensate 65% of Genesis depositors, 56% of Royal bank depositors and 10% of Trust Bank depositors, to give a sum total of $458 650,80 disbursed in cash," Chikura said.
In his first monetary policy statement issued on Monday, central bank governor John Mangudya said four banks were facing liquidity and solvency challenges due to macro and institution specific factors.
The DPC was set up by government to administer the Deposit Protection Fund, whose primary objective is to compensate depositors in the event of insolvency of commercial banks and other financial institutions.
The banks have a composite deposit ratio of $1,2 billion.
Zimbabwe currently has 19 operating banking institutions, comprising 15 commercial banks, one merchant bank and three building societies and one savings bank.
The Camels rating system is a tool used by governments to evaluate the safety and soundness of the banking sector, with each element rated on a scale of one, indicating the best performance, to five which indicates the worst performance.
DPC chief executive John Chikura told the Parliamentary portfolio committee on Finance on Monday that of the 11 financial houses, five were on the third rating while four are rated fourth, with two in category five, reserved for the worst performers.
"At this point we are not at liberty to disclose the names of the financial institutions as this will cause unnecessary alarm in the industry.
"What we can assure this committee and the banking public is that we are working flat out to ensure that depositors are protected in the eventuality of bank failures," he said.
Chikura said of the $1,2 billion deposits, at a cover level of $500, DPC was exposed to the tune of $52,3 million, which could affect 770 053 depositors.
The corporation's exposure to distressed contributory institutions was $16,9 million, representing 138 186 accounts.
The DPC said the depositor's protection fund is sitting at $14,6 million, representing 19,27% of the targeted fund. Of the total amount, close to $5 million is sitting with debtors and $9 million is invested in Old Mutual trust bonds.
DPC said with the current Fund, it could only manage to cover 1,2 million depositors out of about 1,4 million representing 87,3% cover from the desired 90%.
To date, DPC has only managed to compensate 6 911 depositors out of a total of 13 111 depositors from 2003.
"Three of the financial institutions had compensations during the Zimbabwe dollar era, namely Century, Rapid and Sagit.
"From 2012, we have managed to compensate 65% of Genesis depositors, 56% of Royal bank depositors and 10% of Trust Bank depositors, to give a sum total of $458 650,80 disbursed in cash," Chikura said.
In his first monetary policy statement issued on Monday, central bank governor John Mangudya said four banks were facing liquidity and solvency challenges due to macro and institution specific factors.
The DPC was set up by government to administer the Deposit Protection Fund, whose primary objective is to compensate depositors in the event of insolvency of commercial banks and other financial institutions.
Source - Zim Mail
