TRUST will launch a legal battle against the cancellation of its banking licence as it emerged that the process had not been properly followed.
BY OUR STAFF
Last week, the Reserve Bank of Zimbabwe (RBZ) cancelled the operating licence of Trust, accusing the institution of abusing depositors’ funds. RBZ said Trust was unsound and not operating according to sound administrative and accounting practices and procedures.
RBZ said the institution was undercapitalised with a core capital of US$1,90 million and has been posting persistent losses since inception, amounting to US$18,01 million.
It emerged from impeccable sources — who requested anonymity due to the delicate nature of the case — that due process was not followed when the institution was closed.
Standardbusiness learned last week that the RBZ wrote a letter to Trust notifying its intention to cancel the operating licence. RBZ said Trust should appeal to the Minister of Finance. It did but some weeks later RBZ came with a shocker.
“They [Trust] did not get a response from the Minister of Finance and were surprised when RBZ announced the cancellation of the licence saying the minister had assented to the move,” an executive said.
“RBZ and the minister were in the picture of its [Trust Bank] recapitalisation plans.”
After the cancellation of the licence, Trust is said to have relayed the message to the prospective investor, South Africa’s Mining Oil and Gas Service (Mogs) which pledged its commitment to finalise the transaction.
Mogs, a subsidiary of the cash-rich Royal Bafokeng Holdings, is seeking government approval to construct a fuel pipeline linking Beira and three southern African countries through Zimbabwe as part of the transaction to invest in Trust.
It is understood that after the cancellation of Trust’s licence, executives from Mogs will visit the country soon to tie the loose ends to the deal.
“The investor will be in the country soon to finalise the transaction. Its investment into Trust is peanuts considering that the investor wants to put US$800 million in the energy sector,” a source said.
“Approvals from the Ministry of Energy and Power Development have been slow in coming since there was a change of ministers after the end of the inclusive government. The new minister was briefed about the transaction and supports the investment.”
RBZ had not responded to written questions sent to its office last week. Registrar of banks Norman Mataruka had earlier told Standardbusiness to send questions in writing to the bank’s spokesperson Alson Mfiri.
While Trust battles for the restoration of its operating licence, smaller banks have been under pressure from clients waiting to withdraw their money as the contagion effect spread in the banking sector.
Multichoice told subscribers to stop using Allied Bank as a payment point for the digital satellite television subscriptions.
The National University of Science and Technology informed returning students to deposit fees into FBC instead of the Metbank account. This will further put pressure on Metbank.
Analysts say the banking sector will continue “to be confronted by tightening headwinds as the outlook of the economy remains fraught with uncertainties”.
“National savings rate is trending downwards and liability gathering is likely to remain challenging as low incomes growth and weak investor confidence is militating against deposit mobilisation from the unbanked population,” research firm MMC Capital said in a note to investors.