Politicians blamed for failure of banks

HARARE – Top politicians and big companies have been blamed for the routine collapse of indigenous owned banks in Zimbabwe due to non-repayment of loans.

\n

Gono

\n

The politicians are said to be taking advantage of an ineffective regulatory and supervisory framework, poor corporate governance and poor risk management by monetary authorities.

\n

At least seven locally owned banks have folded in Zimbabwe in the past three years. These include Renaissance, Genesis, Royal, Trust and Interfin Banks.

\n

the quality of leadership elevated by a liberalisation policy to protect the country from big banks […] could hold it to ransom

\n

This year alone, three have collapsed – Allied Bank, owned by ruling Zanu PF minister, Obert Mpofu, AfrAsia and Tetrad.

\n

The Reserve Bank of Zimbabwe said it was monitoring other struggling finance institutions.

\n

According to the southern African nation’s central bank several more financial institutions are not safe from collapsing, as they are battling the current liquidity crisis and poor corporate governance.

\n

Instead of facing the worsening financial situation, the government blames the west for the economic mess.

\n

The Zimbabwe Bank and Allied Workers Union (ZIBAWU) recently called for an investigation of the sector, blaming stakeholders from executives to the central bank for the rampant collapse of various banking institutions.

\n

But revelations show that that politicians played are key role in the collapse of some banks.

\n

Companies that dominate the loan book of the failed banks include RioZim, Lunar Chickens – owned by former central bank chief, Gideon Gono – West Properties, Harambe Holdings, Croco Holdings, ZimAlloys and Zimglass.

\n

Three institutions, which folded in recent months AfrAsia, Allied Bank, Interfin and Tetrad’s top 20 debtors, owe a combined staggering $206 million.

\n

According to state media, top five debtors in AfrAsia owe more than $20 million and they include Lunar Chickens with $7 million, Zimglass and Rio Zim ($4 million each), Wattle Company ($2 million) and JR Goddard ($3 million).

\n

The top five debtors in Tetrad Holdings — Tetrad Holdings shareholders, West Properties, Tetrad Resources, Rio Zim and Croco Holdings — owe a combined $25 million.

\n

Allied Bank is owed by Zitac, Brian Justice, the Zimbabwe Mining Development Corporation, Dalston, and Babiden Investments, who owe $1.3 million.

\n

Economist, John Robertson says the local banks were likely to attract not so sound customers.

\n

“New banks were likely to attract not so sound customers and the quality of leadership elevated by a liberalisation policy to protect the country from big banks, which could hold it to ransom, saw even the less deserving securing bank licences,” he said.

\n

He blamed executives for accruing “lethal” non-performing loans by awarding easy credit to their relatives and friends, which were then consumed rather than invested

\n