Zimbabwe’s central bank loses grip on asset management firms

via Zimbabwe’s central bank loses grip on asset management firms January 15, 2014 By Bernard Mpofu NewsDay

THE Reserve Bank of Zimbabwe has lost its grip on asset management firms after the apex bank transferred its erstwhile supervisory role to the recently rebranded capital markets regulator.

According to a circular by registrar of banks Norman Mataruka last Tuesday, the county’s investment managers will, with immediate effect, report to the Securities and Exchange Commission of Zimbabwe (SECZ).

This follows amendments to the Asset Management Act and the Collective Investment Schemes Act through the enactment of the Securities and Exchange Amendment Act which was gazetted last August. Before the amendments, the capital markets regulator, formerly known as the Securities Commission of Zimbabwe, had limited scope, often pitching the commission on a collision course with players.

“All asset management companies are advised that the responsibility for registering, supervision and suspension of registration and cancellation of registration of asset management companies was transferred from the Reserve Bank to the Securities and Exchange Commission of Zimbabwe,” Mataruka said.

“Accordingly, the Reserve Bank is handing over the supervision of asset management to the SECZ. The Reserve Bank, through a memorandum of understanding, will continue to liaise with SECZ to ensure that there is no regulatory arbitrage.”

RBZ took over the supervision of asset managers from treasury 10 years ago.

In his maiden monetary policy statement, former central bank chief Gideon Gono said some asset managers were engaging in permissible activities equating them to briefcase businesses and accident in waiting. More than 100 firms were closed as a result.

The central bank has since the adoption of multi-currencies stopped its involvement in quasi-fiscal activities to focus on monetary policy.

According to confidential central bank reports seen by this paper, as at September 30, 2013, a total of 14 out of 15 asset management companies complied with the minimum capital thresholds of $500 000. But, TFS Asset Management, the report showed, was not compliant with the minimum core capital.

During the period under review, Infinity, another asset management firm, was placed under voluntary liquidation following failure by the institution to close a funding gap of $1,02 million. The firm’s shareholders appointed Tudor House Consultants as the liquidator of the institution.

“TFS Asset Management company’s capitalisation initiatives are hinged on the capitalisation of Tetrad Holdings Limited,” read part of the document dated November 15 2013.

Tetrad Investment Bank’s capital position, according to the central bank, deteriorated to $8,42 million as at September 2013 from $10,95 as at July 2013 weighed down by losses.