Maravi

‘FBZ surviving on govt deposits’

COMMENT - Notice how this works. Parastatals must be sold off, because nationalisation and government are 'wrong'. Assets belonging to or supporting political competitors however can be nationalized at the drop of a hat. This is not about neoliberal ideology anymore, it is about the maintenance of political power, nothing else.

‘FBZ surviving on govt deposits’
By Chiwoyu Sinyangwe
Thu 10 Mar. 2011, 04:00 CAT

FINANCE Bank Zambia Limited is merely surviving on government-related deposits, says a source close to the transaction. And the Bank of Zambia (BoZ) yesterday conducted a hearing of interested parties concerning Finance Bank “in private” and amidst tight security.

According to sources close to the transaction, Finance Bank was currently only surviving on the large deposits from the government ministries and other agencies that had been keeping money with the institution.

The sources said the government had instructed some government institutions to maintain their deposits in the bank forcibly grabbed from the owners in December 2010.

“Basically, Finance Bank is currently insolvent but we have been assured by the Bank of Zambia that all deposits have been guaranteed 100 per cent by the government,” the sources said.

“And to prevent the situation from worsening, the ministry of finance has instructed government institutions like NAPSA National Pensions Scheme Authority, ZRA Zambia Revenue Authority and even Workers' Compensation Fund Control Board with huge amounts of deposits to maintain their position in Finance Bank to enhance its liquidity. But from the point of view of private sector deposits, Finance Bank is not solvent.”

The sources said the BoZ panel headed by deputy governor administration Dr Tukiya Mabula-Kankasa had assured that deposits in Finance Bank remained safe even after the bank was nationalised.

“The fact that the deposits are guaranteed on government money makes us depositors get enough assurance that our money in Finance Bank is safe,” the sources said.

And the sources said there was an indication from the Central Bank that Finance Bank was not sufficiently liquid.

The sources said First Rand Merchant Bank which trades locally as First National Bank (FNB) was scheduled to take over Finance Bank once the process of its sale was completed.

“The Bank of Zambia has indicated that the restructuring of FBZL will entail a Purchase and Assumption Transaction - meaning Finance Bank is unsound but will be taken over by a sound bank,” the source said. “So, what's going to happen now is that First Rand Merchant Bank is just preparing to takeover the asset.

Before the end of this year, all Finance Bank branches in the country would be converted into FNB branches.”

And a securities and investment specialist has observed that there was very little information from BoZ to guarantee the integrity of the process.

Dr Francis Mubanga of Tasheni Financial Limited said the hearing conducted yesterday was more legal than business-related activity.

“As an investment expert, I would have loved to hear more on the position of safety of depositors as well as other stakeholders to be affected by this transaction,” Dr Mubanga said. “For instance, it would have been interesting to unveil to the stakeholders the current balance sheet for the bank.”
The hearing was held in camera amidst tight security and thorough veting from a combined BoZ security headed by Kedrick Zombe and officers from Zambia Police.

By midday, the flow of interested groups was low.

Labels: FINANCE BANK, NATIONALISATION

posted by MrK @ 1:59 PM