eBusiness Weekly
Tapiwanashe Mangwiro
Nedbank Zimbabwe has raised additional capital through a rights issue and is now compliant with the minimum capital requirement of ZW$ equivalent to US$30 million, according to the Reserve Bank of Zimbabwe.
Capitalisation — the sum of a bank’s assets minus the sum of liabilities — is a key metric for safe and sound banks.
In 2020, the Reserve Bank of Zimbabwe (RBZ) announced US dollar benchmarked minimum capital requirements for the banking sector.
According to the apex bank regulations, large commercial and foreign banks (tier 1) are required to have a minimum capital of US$30 million, while tier 2 merchant banks, building societies, development banks, finance and discount houses should have a minimum capital of US$20 million.
Nedbank Zimbabwe alongside AFC Commercial Bank (formerly Agribank) and NBS failed to meet the US$30m bank capitalisation requirement.
As at December 31, 2021, declared core capital US$ equivalent stood at US$23.35 million.
“Accordingly, Nedbank Zimbabwe’s reported minimum capital as at 9 February 2022 is ZW$ equivalent to US$31,1 million, against the regulatory minimum of the ZW$ equivalent to US$30 million,” said RBZ governor John Mangudya in a statement.
CBZ Building Society and ZB Building Society also failed to meet the stipulated capitalisation threshold. The merger of CBZ Building Society and CBZ Bank was approved and the completion of the process is underway.
However, the central bank extended, on a case-by-case basis, the capitalisation compliance to December 31, 2022 for banks and deposit taking microfinance institutions that failed to meet the capitalisation requirement by end of 2021 due to the effects of Covid-19.
Meanwhile, Getbucks Financial Services says it is negotiating for a US$5 million recapitalisation to enable the bank to meet the required minimum threshold.
GetBucks company secretary, Michael Munemo, in a notice to shareholders said negotiations for a recapitalisation are still in progress, the full impact of which is still being determined and if successfully concluded may have a material effect on the price of the company’s securities.
“Shareholders are advised that the board of directors has since approved the recapitalisation which will result in the increase in capital of the Zimbabwean dollar equivalent value of up to US$5 million at the prevailing Reserve Bank of Zimbabwe auction rate,” he said.
He added that advisors, an underwriter and other related parties have been identified and are in the process of being appointed.
“It is anticipated that a circular to members will be issued and a notice of an extra-ordinary General meeting of members will be published before the end of the first quarter of 2022.The transaction will be subject to all legal and regulatory approvals prior to the initiation of the process,” Munemo said.
