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Gono vows to clean up banking sector before retiring next year

GONO VOWS TO CLEAN UP BANKING SECTOR BEFORE RETIRING NEXT YEAR
Harare August 1, 2012 (New Ziana) – Reserve Bank of Zimbabwe (RBZ) governor Dr Gideon Gono has promised to clean up the banking sector and rid it of errant bankers before his term of office expires next year.
Gono, who took office in December 2003, said he was not seeking re-appointment.
He warned errant bankers that the central bank would not brook “any nonsense” in the financial sector.
“I have 16 months to go to the end of my second term. Any nonsense in the financial sector, you will go before I go, that is my promise to depositors,” he said in a stern warning to bankers who were present at the presentation of the mid-term policy Tuesday.
“I am not seeking to be re-appointed. I will make sure before I go, bankers are going to be as disciplined as never before. If it means putting you in jail in order to make sure that your institutions are safe and sound, I will do that.”
With an increasing number of bankers abusing depositors’ funds and being allowed to walk scot-free, Gono said moves were in motion to amend banking laws to make it a criminal offense.
A number of banks have collapsed in Zimbabwe, most recently Royal Bank, amid revelations that depositors’ funds were abused but the bankers have not been brought to book.
Gono, whose re-appointment sparked controversy in 2008 as it was being politicized, said he wanted to leave the banking sector in Zimbabwe “as strong as at no other point in its history.”
As part of the measures, Gono announced an eight fold increase in minimum capital threshold for most banks, in a move which sent shock waves in the financial markets.
The capital threshold for commercial banks starting June 2014 was put at $100 million, up from the current $12.5 million.
Requirements for other institutions were also adjusted accordingly, with the institutions given a staggered approach to meeting the capital adequacy levels.
New Ziana

Minimum capital thresholds hiked 800 percent

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

BNC extends rights offer

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

Increase in bank capitalization welcome

INCREASE IN BANK CAPITALIZATION WELCOME
Harare July 23, 2012 (New Ziana) -The planned review of the minimum capital threshold of banking institutions is welcome as it will improve efficiency and reliability of the banking sector as well as bolster the economy, analysts have said.
Reserve Bank of Zimbabwe Governor Dr Gideon Gono hinted on increasing the minimum capital thresholds of banks when he presents his Mid-Term Monetary Policy Review Statement at the end of this month.
Currently the minimum capital requirement for commercial banks is US$12, 5 million while that of Merchant banks is US$10 million.
Bankers Association of Zimbabwe President George Guvamatanga said the increase would go a long way in strengthening banking institutions.
“Banks drive economic growth and higher capitalization would mean that they are stronger institutions.
“This is exactly what our economy needs going forward as they will have improved capacity to finance business,” he said.
While the increase is imminent, the ability of local banks to meet the new thresholds remains questionable as many of them struggled to meet the deadline for the last review.
Economic Analyst John Robertson said the smaller banks would struggle to meet the new thresholds.
“It is important that the banks meet the required threshold but the smaller banks might struggle”.
“An increase would mean that the smaller banks might have to merge inorder to meet the requirements”.
“We have too many undependable small banks operating in uncertainty; It is better that we have a few well financed banks”, he said.
Some analysts however think the current thresholds are appropriate and an increase would only result in banks hiking charges in order to meet the new threshold.
Early this month Genesis Bank voluntarily surrendered its banking licence to the Reserve Bank of Zimbabwe after failing to raise minimum capital requirements
New Ziana

Tax register compliance increases

TAX REGISTER COMPLIANCE INCREASES
Harare July 21, 2012 (New Ziana)-At least 66 percent of registered  retailers have  complied with the government directive to install fiscalised tax registers meant to improve transparency in the remittance of Value Added Tax to the fiscus, Finance Minister Tendai Biti said recently.
Government in 2010 directed enterprises with an annual turnover of US$240 000 (category C) to install the tax registers.
Initial resistance form retailers who argued that costs of installing the new devices were high as suppliers were only two at that time forced the government to defer the deadline to install the new devices twice.
The government went on to license eight more suppliers resulting in costs going down.
In his Mid Term Fiscal Policy review statement presented in Parliament last Thursday, Biti said compliance had improved.
“To date sixty six percent of the registered operators in category C have fully fiscalised their operations, six percent are at various stages of fiscalisation, whilst twenty eight percent are yet to commence the fiscalisation process,” he said.
The percentages translates to 2 117 fully fiscalised operators, 185 who are still in the process of installing the devices and 886 who are yet to commence the fiscalisation process.
Biti said some operators were complaining about the lengthy delays that some suppliers were taking to deliver the gadgets with some taking over two months.
“I, therefore, propose that where an approved supplier fails to deliver the devices within a period of six weeks, penalty provisions that are applicable to registered operators will apply to the supplier. This measure will take effect from 1 August 2012.”
Biti said the government would soon compel operators in categories A, B and D whose annual turnover also exceeded US$240 000 to fiscalise.
“Registered operators in categories A, B and D whose annual turnover exceeds US$240 000, should thus fiscalise within a period of ninety days beginning 1 August 2012,” Biti said.

Zimra has since started penalizing non-compliant firms US$25 for every till point.
Revenue collection is expected to increase by 20 percent when all targeted firms have adopted the fiscalised tax devices.
South Africa, Tanzania and Kenya are some of the countries in Africa that have already adopted the new tax management system.
New Ziana

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