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Conrad Mwanawashe Business Reporter
THE National Social Security Authority has petitioned the High Court for the liquidation of Capital Bank because it can no longer function as a going concern or pay its liabilities.
The case will be heard today before Justice Chigumba. NSSA is the largest shareholder in the failed bank holding 87 percent with the remainder held by Renaissance Financial Holdings.

The authority is seeking a provisional liquidation order of Capital Bank and the appointment of Mr John Mafungei Chikura of Deposit Protection Corporation as the provisional liquidator.

“The applicant (Capital Bank) is no longer able to trade as a going concern. It is just and equitable that the applicant be wound up in order to protect the interest of all creditors,” the court documents say.

The court papers say that Capital Bank is no longer able to carry out any banking business since its license was cancelled by the Reserve Bank of Zimbabwe last month.

Capital Bank license was cancelled by the RBZ last month after NSSA had indicated that it would not recapitalise the struggling institution.

The RBZ noted that the bank was undercapitalised and in the absence of capital injection, the financial condition of the banking institution dictated the banking institution be wound up.

The central bank also noted that Capital Bank had been operating in an unsafe and unsound financial condition characterised by critical under capitalisation, persistent loses, chronic liquidity challenges and inordinately high levels of non-performing loans.

RBZ Governor Dr John Mangudya told parliament on Monday that five banks were struggling. The court papers say that Capital Bank no longer has a functional board of directors or executive or management team. Capital Bank managing director Mr Lawrence Tamayi resigned June 23 while the other board members resigned on June 4.

In a letter to NSSA general manager, James Matiza, dated June 23, Mr Tamayi said: “Following the Board of Directors resignation as per our letter dated June 4 2014, the Reserve Bank of Zimbabwe cancellation of the bank’s license as per their letter dated June 2 2014 and shareholder resolution of October 17 2013 which resolved to wind up the bank, I wish to advise of my resignation as managing director of Capital Bank. Notwithstanding the date of this letter, the resignation is with effect from June 4 2014,” said Mr Tamayi.

“Please note that the company still owes me earnings for the months of April and May 2014 plus all pension contributions I have made when I was employed by the company. In addition, all my loan obligations can be offset against my accrued leave days,” he said.

Capital Bank was a merchant bank since 2001 but had four tumultuous years where it has previously been placed under recuperative curatorship by the central bank.

It emerged from curatorship after an investment had been made by NSSA in Renaissance Financial Holdings which was the holding company of Capital Bank. An analysis of capital movement from March to September shows that the bank had a negative capital of $17,304,10 as at August 31 2013.

The bank’s accounts show that it suffered a loss of $25,152,193 in 2012 and $13,108,771 last year. Its capital and reserves are a negative $20,397,174 and it has total outstanding liabilities in excessive of $35,307,656. It has a negative share capital in excess of $25 million. There are no further prospects of a further capital injection into the bank.

“I respectfully submit that, in light of the resolution by the shareholders and the fact that the company has no directors, for it to be wound up and that it is just and equitable for a provisional order for the liquidation of the company to the issued in the circumstances,” said Mr Patrick Lameck Mapani in an affidavit deposed as acting NSSA general manager.