TUESDAY, 5.00PM:
ZIMBABWE’S United Merchant bank, which belongs to the high-profile and controversial black businessman Roger Boka, has suffered a run on deposits which it cannot sustain.
When Boka’s bank opened three years ago, it was criticised for being under-capitalised. Many of the country’s financial institutions are exposed to the bank, which closed for a day without explanation 10 days ago, causing great agitation in the country’s financial sector.
Boka has admitted in a statement that the bank is in “a precarious position”, and that he has asked President Robert Mugabe’s government and the Zimbabwean Reserve Bank to intervene.
An investigation into the bank was launched by Finance Minister Herbert Murerwa last week “to ensure that depositors’ funds are protected and that the integrity of our financial system is maintained at all times”.
It is quite possible that the collapse of Boka’s bank in an already-weakened Zimbabwean economy could drag down other institutions with it.
Boka has blamed the outflow of deposits, already amounting to Z$1,4-billion, to negative publicity against black-owned banks. He adds that the bank is considerably exposed to the agricultural sector, saying that the 45% drop in the price of tobacco this month has led to defaults on agricultural loan repayments. UMB’s support for unwieldy parastatals, in response to government requests, and its support of a war veterans’ fund, compounds its problems.