The central bank on Thursday cancelled the licence of Capital Bank Corporation at the bank’s request after the major shareholder, National Social Security Authority (NSSA) indicated that it was no longer willing to inject additional capital into the institution.
“The bank has been operating in an unsafe and unsound financial condition characterised by critical undercapitalisation, persistent losses, chronic liquidity challenges and inordinately high levels of non-performing loans,” said the RBZ in a notice.
The central bank said it was satisfied with the reasons for the request, adding that the cancellation would be in the best interest of the bank’s creditors, depositors and members.
Earlier this year, NSSA general manager, James Matiza told parliament that government had forced the authority to invest into the bank (former Renaissance Merchant Bank) despite advice to the contrary.
The bank was part of Patterson Timba’s business empire which collapsed in 2011 in a cloud of poor corporate governance allegations. NSSA, a statutory pension scheme set up in 1989 to which all employees make contributions, took a controlling 84 percent stake in the bank in 2012 after converting its $8, 5 million deposit into equity and rebranded it.
It also injected $9.8 million in cash and assumed a debt of $5.9 million owed to telecomms giant, Econet.
“Our expectation did not turn out to be real. The cash NSSA put in was meant to attract new business but they took our money to repay depositors,” he said.
Recently, Matiza said an unnamed Reserve Bank of Zimbabwe board member had written to finance minister Patrick Chinamasa suggesting that the authority inject more funds to resuscitate the bank.
Subsequently, the finance ministry wrote to the Ministry of Public Service, Labour and Social Welfare requesting that it persuades NSSA to invest $40 million to save the bank.
“We want to get out of this bank, as to what will happen to the $39 million, we many not recover some of it,” said Matiza then.
“I don’t think it’s a wise idea to put more money. We may be compelled but our brief to the minister (of finance) is to let liquidation take place.”