Trust Bank given opportunity to secure investors

By Kudzai Chawafambira

The Reserve Bank of Zimbabwe (RBZ) says defunct Trust Bank Corporation Limited (Trust Bank) shareholders have until April 8, 2015 to secure new investors.

Trust Bank, owned by William Nyemba’s Trust Holdings Limited (THL), was placed under provisional liquidation by the High Court in October 2013.

“The major shareholders of the bank may… engage any prospective shareholders to inject into the institution and restore its safety and soundness to levels required as per prudential standards,” the central bank said on Tuesday.

The Deposit Protection Corporation (DPC) has been appointed as provisional liquidator and is currently paying a maximum $500 per depositor.

In December 2013, the RBZ cancelled Trust Bank’s licence and subsequently pushed for its liquidation.

The move came at a time the financial institution was in discussions with a South African investor, Mining Oil and Gas Service (Mogs),which was said to be willing to inject $20 million fresh capital.

The bank was seriously under capitalised with core capital of $1,9 million against the RBZ’s capital threshold of $25 million by the end of June 2014.

Prior to the cancellation of the bank’s licence, its parent company, THL was delisted from the Zimbabwe Stock Exchange after failing to meet listing obligations.

In March last year, DPC had paid 220 Trust Bank depositors. However, the compensated account holders represented only eight percent of the total 2 958 who had their money locked up in the bank.

This comes as DPC defied a petition by Trust — through its attorneys Gwaunza and Mapota Legal Practitioners — to hold off the compensation process after it lodged an Administrative Court appeal against its closure.

John Chikura, DPC’s chief executive, argued that his institution was acting in line with its mandate “to compensate depositors in full or in part… in the event of insolvency of a contributory institution”.

DPC pays out a maximum insurable amount of $500 to each depositor.

“Before the creation of DPC, there was uncertainty about how and when depositors will be compensated in the event of a bank failure.

The existence of a deposit protection fund ensures that depositors are assured of their payments in the event of bank failure,” said Chikura.

Trust lodged an Administrative Court appeal challenging revocation of its operating licence on January 7 last year and successfully challenged regulatory authorities in the High Court for the postponement of its liquidation process by the Reserve Bank of Zimbabwe (RBZ), and its agents.

In its petition to DPC, Trust said “the court still has to give an order either confirming you as the final liquidator or setting aside the provisional order,” adding that “your (DPC) powers are therefore limited to the terms of the provisional order given by the High Court.”

Trust ordered DPC to retract “the call to depositors to claim compensation pending finalisation of the High Court proceedings and hold off disposing of any of the bank’s assets in whatever form.” Daily News