January 17th, 2011 in Business, NewsAPA-Harare (Zimbabwe) At least four Zimbabwean financial institutions are under stress after they allegedly missed a 31 December 2010 deadline to meet minimum capital thresholds set by the Central Bank in the country, the ZimOnline news agency reported Monday.
According to the news agency, only 20 out of the country’s 24 financial institutions were in compliance with the prescribed minimum paid-up capital requirements as of the end of last year.
Under the Reserve Bank of Zimbabwe (RBZ) regulations, for commercial banks to be operational they would need to have share capital amounting to US$12.5 million while merchant banks should have had balance sheets of US$10 million by the end of last year.
Building societies were supposed to have raised their capital to US$5 million by the end of last month.
“A number are still under-capitalised and may be forced to close or seek strategic partners if they are to remain operational,” an RBZ source told the news agency.
He refused to disclose which institutions were under stress, fearing this could trigger panic in the market.
RBZ governor Gideon Gono is expected to announce the outcome of the financial sector recapitalisation programme when he presents his 2011 monetary policy statement later this month or in February.
The failure by the financial institutions to meet the new RBZ capitalisation requirements rekindles debate as whether or not the country is over-banked.
Analysts say that with its small population, Zimbabwe only requires a minimum of five and a maximum of 10 banks.
The country currently has more than 40 financial institutions that are scrambling for a shrinking cake.