Zamco mops $0,5bn bad loans from banks

Source: Zamco mops $0,5bn bad loans from banks – DailyNews Live

Ndakaziva Majaka      20 April 2017

HARARE – The Zimbabwe Asset Management Corporation (Zamco) has mopped up
over $500 million bad loans from the country’s banks in an effort to make
them attractive to foreign investors.

Finance minister Patrick Chinamasa said since the Special Purpose Vehicle
began operations in 2015, it has relieved local banks allowing them to
clean their balance sheets.

He said as part of efforts to strengthen the banking sector, government
had advanced Treasury Bills (TBs) to all financial institutions whose bad
debts were assumed.

A TB is a short-term debt obligation backed by a government with a given
maturity, in most countries the promissory notes are issued with a
maturity of less than one year.

“Through Zamco we have also given banks an opportunity to release
resources that had been tied up in NPLs so  that they continue to support
economic activities throughout the country

“We have also helped borrowers to restructure their facilities so that
they would continue to service their loans at affordable interest rates
over a relatively longer period,” Chinamasa said, pointing out that the
average NPL ratio in the banking sector had also gone down with banks now
aiming for the regional prudential benchmark of five percent.

According to central bank governor John Mangudya, Zamco has also started
acquiring bad loans secured by mortgage bonds, after assuming total NPLs
worth $812,5 million in 2016.

Some of the banks holding on to TBs after surrendering their NPLs to Zamco
include FBC Bank, which at the end of 2016, held $7,3 million in TBs
categorised under acquisition of NPLs by Zamco.

ZB Bank as at December 31, 2016 recorded a $20,4 million contribution from
Zamco TBs, up from the $13,7 million recorded prior comparable period,
with group chief executive Ron Mutandagayi saying Zamco had provided
credit relief to the group with TBs worth $3,7 million in 2016 alone.

Zamco also helped revive the fortunes of local bank, Metbank, after it
assumed about $14 million of Metbank’s debts to regional lenders, as the
bank moved to clean its balance sheet.

At close of 2016, Zamco had a portfolio of acquired NPLs amounting to
$812,5 million comprising a proprietary portfolio worth $548,6 million and
a managed portfolio of $263,8 million.

Further, another financial services institution, NMB Zimbabwe, surrendered
to the Zamco loans amounting to $11,6 million in the first half of 2016.

In addition, Zamco is also being used to assume bad debts from
government-owned firms, like the recently-acquired pharmaceuticals group,
CAPS Holdings.