Tuesday, 31 July 2012 16:35

Written by Victor Nyamwanza

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MINIMUM CAPITAL THRESHOLDS HIKED 800 PERCENT
Harare July 31, 2012 (New Ziana) – The Reserve Bank of Zimbabwe (RBZ) on Tuesday hiked minimum capital thresholds for financial institutions by over 800 percent in an unprecedented move that could spell doom for struggling local banks.
Presenting the 2012 mid-term monetary policy statement, RBZ governor Gideon Gono said the move was aimed at fostering a more stable financial system and protecting depositors’ funds.
Commercial and merchant banks are required to increase their capital to $100 million from the current $12.5 million and $10 million respectively by June 2014.
Building Society thresholds have been set at $80 million up from $10 million while Discount and Finance Houses have to raise their capital levels to $60 million respectively, up from $7.5 million.
Micro-finance institutions on the other hand will have to raise an additional $4 million to top up the current $1 million before the deadline.
“The increases in minimum capital levels for banking institutions has been necessitated by the dynamic nature of the financial landscape, regulatory requirements, increasing competition and economic uncertainties, which has placed unprecedented pressure on banks to be adequately capitalized at all times,” Gono said.
The largely indigenous dominated banking sector struggled to meet the capital requirements when the central bank hiked them to the current levels which resulted in two commercial banks closing shop.
Dr Gono said banks were currently struggling to support meaningful economic activities due to the current low level thresholds.
“Fewer, strong and adequately capitalized banking institutions are better placed to meet the funding requirements of a country's economic agents than numerous weak and inadequately capitalized institutions,” he said.
The banks have however been given a phased approach which allows them to meet 25 percent of the threshold by the end of this year, 50 percent by June 2013 and 100 percent by 2014.
Gono said all banks were required to present capitalization plans by end of September.
The move by the central bank follows that in countries such as Algeria and Zambia where banks were required to have capital levels of up to $100 million.
In the case of Zambia however, only foreign banks were required to meet the $100 million threshold while local banks have their threshold set at $20 million.
Gono said the central bank had considered setting different thresholds for foreign and local banks but the idea had been dismissed.
New Ziana

Thursday, 26 July 2012 15:03

Written by Victor Nyamwanza

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BNC EXTENDS RIGHTS OFFER
Harare, July 26, 2012(New Ziana) -Bindura Nickel Corporation (BNC) says it has extended to August the $21 million rights offer to allow the company to conclude negotiations with staff over back pay and retrenchment costs.
BNC shareholders approved the rights offer in June to finance the restart of operations at Trojan Nickel Mine which was put under care and maintenance in late 2008 due to poor nickel prices on the international market, combined with a difficult operating environment obtaining in Zimbabwe at the time.
Recently the government accorded the planned restart of Trojan Mine a National Project Status to allow the company to import equipment duty free.
Announcing a revised time table, BNC said the results of the rights offer which were expected by the end of July would be announced on August 22 this year.
BNC said the need to reach consensus with staff had been necessitated the extension.
“The directors of BNC hereby advise shareholders that the Rights Offer currently underway has been extended,” read part of the statement.
“The extension has been made to allow extra time for staff to respond to an offer made by the company to settle back pay liabilities and retrenchment costs.”
The company said it had recived a good response from creditors highlighting that there was need to get more acceptance from workers.
“Prior to concluding the rights offer, satisfactory resolution with the creditors and with staff on the settlement of retrenchment and back pay costs is required.
“To date BNC has recived acceptance from many staff members, however more acceptances are required,” it said.
The African Development Bank (AfDB) recommended in its monthly report the re-opening of the mine to take advantage of firming international nickel prices.
The nickel mining concern owns and operates the Shangani and Trojan Nickel Mine, as well as its own smelter and refinery situated in Bindura, all of which are currently on care and maintenance.
New Ziana