Interfin Banking Corporation heads for liquidation
Interfin Banking Corporation could be heading for liquidation, considering the financial outlay required to bring its balance sheet back to health, sources have said. The bank was on Monday placed under curatorship by the Reserve Bank of Zimbabwe for the next six months, after it ran into liquidity problems.
Mr Peter Bailey of KPMG was appointed the curator. According to reports, the bank has a capital deficit of more than US$106 million. This implies that any investor willing to revive the bank will first need to plug Interfin’s capital hole before recapitalisng it.
“There are huge debts in the form of non-performing loans advanced to companies linked to the key shareholders,” said one source. “The unfortunate thing is that the loans were advanced to non-performing assets.
“Under such a scenario, it will be quite difficult for the curator to secure an investor who will inject money to plug the capital hole entirely with equity and then recapitalise the bank. After all, the reputation for a bank that would be put under curatorship is difficult to restore. It is actually by God’s grace that the bank did not go straight into liquidation.”
Interfin is understood to have advanced several millions of dollars to companies in which its anchor shareholder Mr Farai Rwodzi had interests. In a number of instances, companies linked to Mr Rwodzi exceeded their borrowing limits. Apart from the banking sector, the embattled businessman has interests in mining and chrome smelting, tobacco, retail, telecommunications, agro-processing, mining and industrial engineering.
As at September 30, 2010, Savanna Tobacco had borrowed about US$18,2 million, while its limit was US$150 000. Mr Rwodzi is a major shareholder in the tobacco company. Zimbabwe Alloys Limited, in which the Rwodzi-led consortium has an 85 percent stake, had exceeded its borrowing limit by about 100 percent at US$14,1 million.
Other companies that owe Interfin Bank include Lunar Chickens, Harambee Holdings, RioZim Limited, AMC, Gulliver, Interfin Resources, Fort Enterprises, ART, CZL Incorporated, Gemgrade, ZimCricket, Apex and Covenant Capital. At the time of the RBZ intervention, it could not be established exactly how much the bank was exposed to.
But analysts have blamed the central bank for taking too long to act. “The real question is why the Reserve Bank took so long to act on Interfin,” said one analyst. “Since the beginning of the year, the bank was facing challenges, but it’s not why the central bank did not take action.”
Interfin customers have been struggling to access money deposited with the bank since January this year as liquidity constraints hit the bank. Genesis Investment Bank decided to surrender its licence after failing to meet regulatory minimum capital requirements. Genesis, which has a negative capital balance of US$3,6 million, failed to secure investments from about 20 possible suitors they engaged.
