HARARE, February 24 (The Source) – The Reserve Bank of Zimbabwe on Tuesday cancelled struggling AfrAsia Bank Zimbabwe’s operating licence after determining that the financial institution was no longer in a sound financial condition.
“Members of the public are advised that on 24 February 2015, the Registrar of Banking Institutions cancelled AfrAsia Bank Zimbabwe Limited’s licence in terms of section 14 (4) of the Banking Act [Chapter 24:20],” the RBZ said in a statement late on Tuesday.
“The cancellation followed board resolutions by AfrAsia Zimbabwe Holdings Limited (the shareholder) and AfrAsia Bank Zimbabwe Limited (the bank) to voluntarily surrender the banking licence.”
The bank, a subsidiary of Mauritius-based AfrAsia Bank Limited (ABL), was placed under increased central bank monitoring last year as its core capital position weakened.
It is one of the four bank institutions that the central bank has said are “ill” including Allied Bank, Capital Bank, whose licences have been revoked and Tetrad, which was suspended from undertaking banking activities.
Early this month, it announced delayed financial results for the full year to June last year showing reduced losses from $20 million in the 18 months to June 2013 to $5,2 million.
In December last year, the bank said it was on course to raise $15 million through borrowings to increase liquidity in the local operation and had hired local finance group, Imara Capital Finance to market its medium-term Secured Note to secure the funds.
But the move appears to have failed, with the bank’s directors opting to surrender the licence. Some depositors last week applied to the Harare Central Police station seeking authority to stage a demonstration against the bank after failing to access their funds.
“The Registrar has determined that the banking institution is no longer in a safe and sound condition in that the institution is grossly undercapitalised and is facing chronic liquidity challenges,” the RBZ said.
“All efforts by the shareholders to recapitalize the institution in order to comply with the minimum capital requirements have failed. In addition, the board of directors advised that AfrAsia Bank Limited was constrained in availing any further support to the Zimbabwe operations.”
The central bank said it has applied for the liquidation of the institution.
The cancellation of AfrAsia Bank’s licence marks the demise of an iconic institution previously known as Kingdom Financial Holdings (KFH) — a poster child of Zimbabwe’s liberalised financial services industry in the 1990s.
AfrAsia Bank Mauritius took control of KFH in 2013 after buying out Chanakira and renamed it AfrAsia Zimbabwe Holdings. The bank changed its name from Kingdom Bank to AfrAsia Bank Ltd and had 12 branches countrywide.
Its closure is symptomatic of an economy in tailspin and renders over 300 workers jobless, according to bank officials.