Central Bank of Zimbabwe increases minimum capital requirements for banks
The Central Bank of Zimbabwe has increased on August 1st the capital requirements for banks in a bid to restore market confidence.The Central Bank of Zimbabwe has increased on August 1st the capital requirements for banks in a bid to restore market confidence.
He made the announcement following the collapse of the retail bank Royal Bank, which was the victim of a liquidity crisis.
Such an increase was needed " because of the dynamic nature of the financial landscape, regulatory requirements, increased competition and economic uncertainties that have placed unprecedented pressure on banks and their level of capitalisation", Central Bank governor Gideon Gono told Les Echos.
Commercial banks and business must now have a minimum of $100 million (€81.1 million) in their coffers instead of $12.5 million previously.
They have until 2014 to fully comply with these new regulations, but need to have at least doubled their capital by the end of 2012.
The Governor believes that indiscipline in the banking sector "has once again reared its ugly head ", a situation that is evidenced by increased abuse of depositors' funds.
He added that the Bank is considering the issuance of Treasury bonds to improve the level of liquidity in the country.