OWN CORRESPONDENT, Harare | Thursday 11.30am.
TWO Zimbabwe banks may be heading for failure after the collapse of the country’s United Merchant Bank (UMB), say local analysts.
The turmoil in Zimbabwe’s banking circles follows the Zimbabwe Reserve Bank’s provision of Z$400-million to prop up the Zimbabwe Building Society.
The building society is believed to have been exposed to Z$500-million of fake commercial paper issued by UMB, which is owned by business tycoon Roger Boka.
Boka’s banking licence was cancelled by the Ministry of Finance in April this year.
The names of the two latest banks to hit problems are being kept under wraps to forestall market chaos. However, economic analysts say the two financial institutions have accumulated a lot of bad debt due to indiscriminate loan policies.
There is also speculation that the Reserve Bank will have to intervene again to clean up the effects of fraud, mismanagement and bad loans at UMB which are rippling through the financial system.
“There are still other banks that were exposed to UMB and there could be repercussions, but we don’t know when,” Emmanuel Munyukwi, deputy chief executive of the Zimbabwe Stock Exchange, told the Financial Gazette.
Local economist and consultant John Robertson added: “It seems that one commercial bank and a merchant bank are also suffering. The situation is not yet over — more casualties are on the way.”
Analysts agree that the central bank cannot continue bailing out finanacial institutions and mergers may become the lifeline that rescues many smaller banks. — Pana
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