THE Ministry of Finance and the Reserve Bank of Zimbabwe have started a process to hand over Zimbabwe Allied Banking Group (ZABG) assets to their previous owners, the Zimbabwe Independent has established.
Impeccable sources this week told this paper that RBZ governor Gideon Gono has appointed Ngoni Kudenga & Associates chartered accountants to conduct an urgent valuation of ZABG’s assets.
According to the sources, Gono has mandated Kudenga to conduct a valuation of the banking group’s assets inside a week so that the central bank can deal with the ZABG matter by month-end.
Gono ordered that a valuation of ZABG’s assets be done inside a week to pave way for a smooth handover of the controversial bank’s assets back to their original owners.
The banks, Royal, Barbican and Trust, were merged at the behest of the central bank to form ZABG after a sector-wide liquidity crisis in 2003 left the institutions insolvent.
The central bank’s valuation comes in the wake of another parallel valuation being conducted by Gwatidzo & Associates. Both auditors were expected to present their assessments to the RBZ and bank owners by end of this week, according to the same sources.
ZABG started trading on February 1 2005 through a special purpose vehicle called Allied Financial Services.
After the formation of the bank, assets belonging to the troubled banks were transferred to Allied Financial Services, which is owned by the government through the central bank. The valuation by the auditing firms seeks to establish government’s level of investment in ZABG and the value of Royal and Trust’s assets in the bank.
On completion of the valuations, the government, through the central bank, is expected to hand the assets back to the directors of the affected banks.
However, the central bank is said to be keen to recover unspecified amounts it advanced as liquidity support to the banks until their closure. Trust and Royal banks initially argued that the in-duplum rule would have to be followed.
Trust and Royal Banks argue that because of the in-duplum rule, interest due to the RBZ could not exceed the capital and therefore the claim by the RBZ that the banks owed the central bank trillions was misplaced.
Sources revealed that Trust and RoyalÂ shareholders have been lobbying in government circles, particularly the Ministry of Finance, for a resolution of the case.
The two banks got a favourable Supreme Court ruling in 2005 which declared the transfer of Royal Bank’s assets to ZABG “null and void”.
Legal experts interpreted Justice Wilson Sandura’s ruling as virtually pulling the plug on ZABG and declaring it insolvent.
The ruling was handed down on appeal by Trust and Royal banks who sought an interdict against their inclusion in the ZABG, an amalgamation of banks set up by the government.
Should Gono follow through on plans to disband the amalgamated bank, ZABG would be rendered insolvent.
Experts say if ZABG is stripped of assets seized from TrustÂ and Royal, the ZABG would cease operations.
The judgement also said that the curators who sold those assets did not follow the Troubled Financial Institutions (Resolution) Act and the Banking Act.
Despite the ruling, ZABG continues to exist to this day unfettered by the unambiguous judgement.
It is this landmark judgement that the troubled banks are using to ratchet up pressure on government, sources said.
Should the disbanding of ZABG occur, Trust Holdings and Barbican Bank could be allowed to trade once again on the Zimbabwe Stock Exchange after a four-year suspension.
At its peak, Trust had risen to become the third largest bank by capitalisation in a market dominated by foreign-owned banks, namely Standard Chartered and Barclays.
BY CHRIS MURONZI