Maravi

(HERALD) 3 banks regularise capital levels

3 banks regularise capital levels
Saturday, 06 August 2011 02:00
Business Editor

THREE of the six banks that were undercapitalised have since regularised their capital levels as it emerged yesterday that Genesis Bank had been sold to a new consortium while Ecobank shareholders had injected more funds into the bank.
Reserve Bank Governor Dr Gideon Gono will meet Kingdom Bank next week "to receive the positive news emanating from their recapitalisation initiatives".

In a statement yesterday, the governor said the central bank was satisfied with progress made and would continue to closely monitor all undercapitalised banking institutions. Ecobank made an injection of US$2,2 million on Wednesday, taking its capital position to US$13,8 million against the prescribed minimum of US$10 million for merchant banks.

The new owners at Genesis had made an undertaking to recapitalise the bank within three months once regulatory approvals have been secured.

ZABG and Royal Bank were given up to September next year to regularise their capital while Renaissance Merchant Bank is under curatorship.

"Stakeholders are hereby assured that the Reserve Bank remains vigilant in monitoring all forms of banking vulnerabilities arising from endogenous and exogenous sources of risk. The bank will continue to refine its supervision methodologies and techniques in line with international best practice, and lessons learnt from the recent global financial crisis," said Dr Gono.

Yesterday, the RBZ chief also announced that the ratio of non-performing loans (NPLs) to total loans in the banking sector was 5,8 percent, and not the 37 percent stated in the Mid-Term Fiscal Policy Review announced recently.

This had also been reported in the Sunday Mail issue of July 31. The ratio of non-performing loans had been averaging below 5 percent since March 2010.

Furthermore, the IMF Article IV Consultation report also confirmed that the ratio remained below 5 percent as at March 31 2011.

"Thus the ratio of 37 percent quoted both in the Sunday Mail and the Mid-Term Fiscal Policy Review is not a true reflection of the status of asset quality in the banking sector," said Dr Gono.

"Inspite of the prevailing liquidity challenges affecting the entire economy, the status of asset quality in the banking sector, as measured by the average non-performing loans, is not of systemic concern to the supervisory authorities."

The Mid-Term Monetary Policy Statement stated that the central bank had, in liaison with the IMF, enhanced its Troubled and Insolvent Banks Policy which dealt with the status of asset quality in the banking sector, among other issues.

The central bank would have to take mandatory corrective action programmes if asset quality was in breach of prescribed thresholds.

Labels: BANKING, ECOBANK, GIDEON GONO

posted by MrK @ 4:56 PM