Zimbabwe: RBZ creates new entities to improve the financial system's stability

Jun 07, 2016

The SAMCs will acquire and manage non-performing loans.

New special asset management companies (SAMCs) will be set up in Zimbabwe to acquire and manage non-performing loans (NPLs) in the banking sector, the Financial Gazette has learned from the Reserve Bank of Zimbabwe (RBZ).

They will complement the Zimbabwe Asset Management Corporation (ZAMCO), which has bought a significant part of non-performing loans in the banking sector, bringing their volume down from about 20 per cent of all loans in 2014 to 11 per cent in December 2015.

Most banks turned to profitability last year, with the combined year-on-year profit increasing by 63 percent to $128.3 million in 2015.

The SAMCs will undertake specific assignments on behalf of the central bank, such as acquiring and managing non-performing loans.

They will also acquire and manage failed banking institutions, and will have powers to investigate and act as curators.

The announcement comes after a new amendment was signed by the president of Zimbabwe Robert Mugabe to strengthen corporate governance in the country's financial services sector.

It includes barring individuals from owning shareholding in a banking institution or in a holding company if the shares exceed 25 per cent of the total nominal value or the total voting rights of all the issued shares of the banking institution.

The new law will also enable the implementation of early warning systems, which will alert the authorities in case of breaches.

In addition, the central bank is in the process of setting up a credit reference system.