Zimbabwe's central bank cancels Allied Bank's operating licence
The Reserve Bank of Zimbabwe said the bank is "grossly undercapitalised".The Reserve Bank of Zimbabwe announced on Thursday (January 8th) that it has cancelled Allied Bank's operating licence and is to apply for its liquidation. The cancellation follows a voluntary surrender of the licence by the banking institution.
"The Reserve Bank 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," it said in a press release seen by the Financial Gazette.
Allied Bank commenced operations on 31 January 2005. The bank was formed from the purchase of assets of three troubled banks, namely Trust Banking Corporation, Barbican Bank and Royal Bank, under the Troubled Bank Resolution Plan (TBRP) framework, as a measure to restore the safety and soundness of the financial services sector.
It is one of the seven financial institutions that were placed under increased central bank monitoring in 2014.
The Zimbabwean banking sector is currently facing liquidity problems, which makes it difficult for many companies to access funding at affordable costs.
Although long-term deposits have more than doubled in 2012, banks are struggling to meet the growing demand from various sectors of the economy, according to a new report from research firm MMC Capital.
"Despite a marked improvement in the long term component of deposits from 9.6 percent in December 2011 to 20.65 percent in December 2012, the capacity of banks to extend the much needed long term facilities to various sectors of the economy remains constrained as demand for credit outpaces supply," according to the research.