RBZ suspends Tetrad Tetrad Investment Bank operations

via RBZ suspends Tetrad Tetrad Investment Bank operations. 13 November 2014

THE Reserve Bank of Zimbabwe (RBZ) has suspended Tetrad Investment Bank from taking deposits and issuing loans until the troubled institution has completed its recapitalisation exercise.

In a notice yesterday, RBZ said the action “has been considered necessary in order to protect the public while the bank implements the Scheme of Arrangement”.

“Further, take notice that the Registrar of Banking institutions has, with immediate effect, suspended Tetrad Investment Bank Limited’s banking activities pertaining to deposit taking and issuing loans, in terms of section 48 (1) (f) of the Banking Act and this suspension remains for the duration of the Scheme of Arrangement,” RBZ said.

In August, Tetrad creditors voted for the scheme meeting that agreed to defer claims until October 31 to allow processes to recapitalise the institution.
The creditors further agreed to January 31 2015 to allow Russian investor Horizon Capital to finalise acquisition of a controlling stake in the bank.
Before the scheme meeting, creditors had obtained writs of execution to attach the bank’s assets.

The move by RBZ could signal that the regulator has lost patience with the bank after it had on a number of occasions said it would finalise the recapitalisation exercises.

In his maiden monetary policy statement, RBZ governor John Mangudya said Tetrad, alongside MetBank, Allied Bank and AfrAsia Bank, were facing liquidity and solvency challenges due to liquidity, macro and institution-specific challenges.

He said the distressed banks command low market share in terms of loans (8,8%), assets (7,2%) and deposits (6,7%) as at June 30 2014.

Mangudya said RBZ has been engaging the distressed institutions to come up with credible plans to turn around their dire financial condition.

“In this regard, shareholders and boards of the distressed banks have been directed to finalise implementation of their turnaround plans, failure of which the Reserve Bank will be left with no option but to intervene and institute appropriate supervisory action in terms of the Banking Act,” he said.

In a recent interview with NewsDay, Tetrad Group chief executive officer Eugene Mlambo said the interim relief provided by the scheme meeting would enable the bank to go forward and complete the investment transaction.

“This will ultimately return the bank to normal, allowing all of its commitments to all creditors and depositors to be met within a reasonable period of time,” Mlambo said.