Business / Companies
Obert Mpofu's bank collapses
08 Jan 2015 at 14:30hrs | Views
HARARE - The troubled Allied Bank has reportedly surrendered its banking licence after failing to inject more capital to keep it afloat due to economic hardship.
In a statement, the RBZ said the banking institution is no longer in safe and sound condition as it is grossly undercapitalised and is facing chronic liquidity challenges.
The development means the central bank will apply for liquidation of Allied Bank Limited.
The central bank said the decision is considered to be in the best interests of the banking institution, its depositors and creditors.
The cancellation of Allied Bank's licence comes at a time other financial institutions have faced similar challenges leaving depositors stranded.
Ex-central bank governor Gideon Gono handed Mpofu the bank after he reportedly injected $23 million into the ailing institution, formerly known as the Zimbabwe Allied Banking Group (ZABG).
ZABG, with 22 branches around the country at the time of purchase, was formed following the amalgamation of the struggling Royal Bank, Barbican Bank and Trust Bank in 2004 as the central bank moved to contain a serious crisis which had hit the sector then.
Despite his vast riches as a Zanu-PF functionary Mpofu has failed to put more money into the bank, amid reports that his takeover deal was not based on cash but rather on assets such as buildings, which the minister has failed to transfer to the bank.
A combination of a shrinking economy, a lack of investment, and Zanu-PF's destructive economic policies is likely to see most of the locally-owned banks shutting down for lack of any cash injection.
Last year, the bank's Bulawayo staff is reported to have, at some point, turned customers away and informing them that the bank has no money.
The financial institution was reported to be under the RBZ surveillance amid concerns that it could be facing insolvency problems under limited operations at 15th Avenue branch.
In a statement, the RBZ said the banking institution is no longer in safe and sound condition as it is grossly undercapitalised and is facing chronic liquidity challenges.
The development means the central bank will apply for liquidation of Allied Bank Limited.
The central bank said the decision is considered to be in the best interests of the banking institution, its depositors and creditors.
The cancellation of Allied Bank's licence comes at a time other financial institutions have faced similar challenges leaving depositors stranded.
Ex-central bank governor Gideon Gono handed Mpofu the bank after he reportedly injected $23 million into the ailing institution, formerly known as the Zimbabwe Allied Banking Group (ZABG).
ZABG, with 22 branches around the country at the time of purchase, was formed following the amalgamation of the struggling Royal Bank, Barbican Bank and Trust Bank in 2004 as the central bank moved to contain a serious crisis which had hit the sector then.
Despite his vast riches as a Zanu-PF functionary Mpofu has failed to put more money into the bank, amid reports that his takeover deal was not based on cash but rather on assets such as buildings, which the minister has failed to transfer to the bank.
A combination of a shrinking economy, a lack of investment, and Zanu-PF's destructive economic policies is likely to see most of the locally-owned banks shutting down for lack of any cash injection.
Last year, the bank's Bulawayo staff is reported to have, at some point, turned customers away and informing them that the bank has no money.
The financial institution was reported to be under the RBZ surveillance amid concerns that it could be facing insolvency problems under limited operations at 15th Avenue branch.
Source - Byo24News
