RBZ cancels Trust Bank’s licence | The Herald

via RBZ cancels Trust Bank’s licence | The Herald December 7, 2013 by Golden Sibanda

THE Reserve Bank of Zimbabwe has cancelled the banking licence for Trust Bank over allegations of abuse of depositors’ funds and violation of the Banking Act.

This marks the second time in eight years that Trust Bank has lost its banking licence.

RBZ yesterday said Trust Bank was financially unsound and was not operating in line with sound administrative and accounting practices and procedures.

“In particular, the bank is critically undercapitalised with core capital of US$1.90 million, has been posting persistent loss (cumulative US$18m since inception).

“The institution has been facing critical liquidity challenges emanating from the poor loan book and the inadequate working capital and gross abuse of depositors funds.”

Efforts at recapitalisation, the RBZ said, had all been futile and the bank was no longer safe and sound.

As such, the central bank said, maintaining Trust Bank’s registration as a bank was no longer desirable in the interests of its depositors, members and creditors.

The licence was cancelled in terms of Section 14 of the Banking Act.

The central bank said Trust Bank failed to maintain a base of net assets of a nature and amount sufficient to safeguard its creditors.

In terms of RBZ’s phased regulatory capital thresholds, commercial banks are required to have US$75 million at hand by end of this month (December 2013) and US$100 million by June 2014.

Trust Bank, the RBZ found, could no longer maintain the prescribed minimum amounts of capital and reserves, while it was also accused of engaging in undesirable methods of conducting business.

“As a consequence of the said cancellation, Trust Bank is no longer a banking institution, as defined in the Banking Act, and therefore its status is that of a company registered in terms of the Companies Act (Chapter 24:03).”

The central bank said in conjunction with the Deposit Protection Corporation, it will institute liquidation procedures to facilitate payments to depositors and creditors.

RBZ said it was left with no choice, but to revoke the licence after efforts at resolving issues around abuse of depositors’ funds failed.

This is the second time Trust Bank’s licence has been cancelled following a similar decision in 2005 after it was found that the financial institution had engaged in imprudent banking practices.

Only last week, Trust Bank’s parent company, Trust Holdings Limited, was delisted after the financial services group had failed to meet continuing obligations.

THL had failed to produce quarterly shareholder updates, financial statements for the year to December 2012, the 2012 annual report and pay 2013 sustenance fees in line with listing rules of the Zimbabwe Stock Exchange.

 

COMMENTS

WORDPRESS: 12
  • comment-avatar
    Mendy 7 years ago

    The first domino has fallen within the local banks in Zimbabwe…the others will topple very shortly. Hang on the road is about to get very bumpy in the coming weeks. The Minister of Finance better take some aspirin as this situation is going to get much worst. I will being praying for Zanu-PF.

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    maisokwazo 7 years ago

    And the name “TRUST” Bank what irony and cynism and defamation of the word trust. Anyway that’s Zimbo at its best indeginisation babe indigenise and milk them depositories and depositors dry just like you did during the days of hyperinflation.

    • comment-avatar
      enda zvakanaka 7 years ago

      Well said. That’s what it’s all about, milking every last drop.

  • comment-avatar
    Dayford 7 years ago

    The beginning of the end.

  • comment-avatar
    Dayford 7 years ago

    Taking a leaf from RBZ itself, helping themselves to depositors’ funds. Which bank is next?

  • comment-avatar
    Patriot 7 years ago

    There is more to this story

  • comment-avatar
    Kitsi-yatota 7 years ago

    it pays to be politically correct in Zimbabwe. Zvikanzi breakfast dinner, kandayiwo ka$1m kenyu kasina basa. the leaders arebZanu pf, the governors ZPf and the judges ZPf, unobuda nepapi ipapo. Trust has been denied a partner who wanted to capitalise it twice now. the first was in 2006/7 and now in 2012/13. long live Trust Bank Limited, long live William and compnay

  • comment-avatar
    OSCAR 7 years ago

    Make sure you get as many of your Zim$ out of the banks as you can. The dominos are starting to fall. This is just the first

  • comment-avatar
    Mendy 7 years ago

    Next to topple is Allied Bank….Gono left just in time so he could see his work bloom and grow. Wasn’t he the one just 3 short months ago said no local banks would close because of the liquidity issue? He didn’t have a clue on how to manage money or the banking system.

  • comment-avatar

    Why are the owners and gono not doing hard Labour????????????????????????????????????????????????????????????????????????????????

  • comment-avatar
    bingo wajakata 7 years ago

    Put your money in an indigenous bank at your own risk period!

  • comment-avatar
    National Observer 7 years ago

    Prove me if I am wrong – the closure is an act of revenge – to feed fat the ancient grudge for zibag releasing Trust assets after the law took its course. Zibag stared collapse and the same s now being prescribed for Trust bank, the only one still standing after babican and Royal bank collapsed. Charity has just proved that she is not a person on her two but on Gideon’ s back. Gideon had conscience not to carry out the political persecution.

    Why not call Obert, the obedient son or any other crook to splash diamonds funds and run it like Jongwe Printers. Is zibag solvent?