Five local banks risks closure as Gono gives a two-week ultimatum

The Reserve Bank of Zimbabwe said on Wednesday it has given five under capitalised banks two weeks to raise cash or face closure, after several banks were forced to shut because of the economic crisis.

At the end of last year five of the country's 25 banks did not have the minimum capital required by law, central bank governor Gideon Gono said.

"Accordingly, all non-compliant institutions... have up to 14 February 2012 to finalise their recapitalisation initiatives or consummate their mergers and acquisitions," he said.

Central bank regulations require commercial banks to have a minimum capital of $12m, while merchant banks must have at least $10m and asset management companies $500 000.

Three commercial and two merchant banks currently lack the required capital, and one of the merchant banks is under curatorship, or administration.

"By no later than 29 February 2012, the Reserve Bank shall engage those institutions that would have failed to identify credible partners and conclude the recapitalisation transactions," Gono said.

The bank will act by March 31 against the institutions which fail to raise the capital.

Zimbabwe's economy is showing signs of recovery from a nearly decade-long downturn following a power-sharing deal after disputed 2008 polls.

Long-time political rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai currently navigate the shaky unity government.

The economic crisis forced several banks to close while others merged or were placed under curatorship.

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