Mpofu’s broke Allied bank collapses

via Mpofu’s broke Allied bank collapses 08 January 2015

TROUBLED Allied Bank, a financial institution owned by Zanu PF minister, Obert Mpofu, has closed due to continued undercapitalisation and liquidity crisis, the Reserve Bank of Zimbabwe has said.

A statement issued by the RBZ said Allied Bank, which has been facing financial challenges for over two years now, voluntarily surrendered its operating licence due to lack of capital and liquidity.

“Members of the public are advised that on 8 January 2015, the Reserve Bank of Zimbabwe cancelled Allied Bank Limited’s licence in terms of section 14 (4) of the Banking Act [Chapter 24:20],” read the statement.

“The cancellation followed a voluntary surrender of the licence by the banking institution. The Reserve Bank has determined that the banking institution is no longer in a safe and sound condition in that the institution is grossly undercapitalised and is facing chronic liquidity challenges,” the statement from the central bank stated.

The bank was initially started by the former central bank boss, Gideon Gono to warehouse over five banks that had collapsed during the hyper-inflation era.

It was eventually bought by Mpofu when he was Mines minister in 2012 for over $23 million but since then, it has failed to stand the economic heat which has seen some financial houses survive.

Last year, a number of civil servants who were banking with Allied went berserk and destroyed one of its branches in Harare after they failed to access their money.

Before the final closure, the institution was reportedly counting on external partners to recapitalise but insiders said the earmarked investors developed cold feet due to its links to the Zanu PF government and the prevailing state of affairs in the economy.

“The Reserve Bank will accordingly hereafter, apply for the liquidation of the institution in terms of section 57(1) (a) of the Banking Act. This action was considered to be in the best interests of the banking institution, its depositors and creditors, and the banking sector in general,” the statement said.

This is not the only bank that has closed down in recent years as the country’s economy continues to tumble with at least four banks having been shut down due to the liquidity crisis caused by lack of foreign direct investment.

Among the banks closed down were Trust, Interfin and Capital.