A local commercial bank in Zimbabwe that was teetering on the brink of bankruptcy was shut down on Wednesday for a period of six months, the fifth to be closed down this year due to liquidity problems.
All deposits at the Royal Bank of Zimbabwe have been frozen and a curator has been named to manage the bank, founded two years ago, the central bank said in a statement.
”The Reserve Bank took this action upon discovering that Royal Bank was not in a sound financial condition,” it said.
”In particular the bank is facing serious liquidity and solvency problems which are attributable to poor corporate governance practices,” it added.
The Reserve Bank of Zimbabwe has this year placed several of Zimbabwe’s newly opened banks and asset management firms under its direct control.
Thousands of depositors have been unable to withdraw their savings as a result and many are returning to the established international banks such as Standard Chartered, Stanbic Bank and Barclays Bank.
In April the central bank announced new measures to tighten the operation of locally-owned banks which have been blamed for plunging the country into economic crisis.
Several high-profile bankers, businessmen and politicians have been arrested or fled the country for alleged financial crimes, including funnelling foreign currency abroad.
Zimbabwe’s financial sector crisis came to light after President Robert Mugabe appointed a new central bank governor who unearthed the malpractices and mismanagement in the sector.
A ”troubled banks fund” was created to help with liquidity support while other banks faced closure.
Central bank governor Gideon Gono said the house-cleaning in the banking sector ”has helped a great deal to avoid a system-wide collapse of our financial sector”. – Sapa-AFP