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NSSA building

Martin Kadzere Senior Business Reporter
RENAISSANCE Financial Holdings has implored the Reserve Bank of Zimbabwe to stop the National Social Security Authority from liquidating Capital Bank Limited saying the State-owned institution is not acting in good faith. RFHL, the minority shareholder in Capital is alleging the authority is “not acting in good faith” by requesting for the liquidation of the bank but trying to escape from self-inflicted problems. NSSA owns 84 percent of Capital while the remaining shares are owned by Mr Patterson Timba, Mr Dunmore Kundishora and Mr Clementine Sidza through RFHL.

NSSA assumed the controlling shareholding in Capital Bank after investing US$24,2 million into the then Renaissance Merchant Bank. RMB was later rebranded to Capital Bank. Before Capital Bank was taken over by NSSA, RFHL was the controlling shareholder.

The Zimbabwe Bank Allied and Workers Union has also questioned the decision by NSSA to liquidate the bank considering that the authority could write off about U$30 million which it says “does not make economic sense for an institution holding workers pensions”.

Initially, NSSA resolved to wind up operations through paying off all depositors but later decided to go for a straight liquidation after realising the weak financial position of Capital Bank. In December last year, the bank had a negative funding gap of about US$13,3 million and shareholders’ funds had moved to  a negative US$17,3 million, according to NSSA.

Faced with such a financial position, NSSA changed its position from paying off unpaid depositors, preferring a straight liquidation.
This is because creditors will only share the available money. And since the process would be court based, no creditor would directly come to NSSA to claim any payment after liquidation.

However, RFHL through their legal counsel Muza and Nyapadi wrote to the central bank on January 28 this year persuading it to turn down the liquidation request.

In the letter, RFHL said there was an appeal before the Finance Minister filed by Mr Kundishona in which he is challenging the agreement entered between the former curator of Renaissance Bank and other parties.

In the event that the appeal is successful, the control of the bank would be restored to RFHL.
RFHL said it was therefore “grossly unfair that NSSA, a party to this appeal rushes to liquidate the bank in an effort clearly designed to render this legal process merely academic”.

It also said there were various funds owed by Capital Bank and one such claim is pending before the High Court. It claimed RFHL is owed a total of US$17,5 million in relation to US$8,6 million arising from equity capital invested in the bank that the RBZ “disqualified” during curatorship.

Further, there is also US$6 million, being a refund that RFHL was supposed to be paid after settling off its indebtedness to the bank through surrendering its Afre scrip that was valued at US$23,9 million dollars. The US$6 million indebtedness is the difference between the US$23 million and the US$17 million that was finally settled.

Capital Bank also owes RFHL US$4 million that was supposed to settle on behalf of RFHL to Kingdom Bank Limited through the set off arrangement of some Afre shares.

RFHL also said Capital Bank came out of the curatorship in March 2012 after NSSA promised the RBZ that it would inject sufficient funds to retain the viability of the bank.

“The resolution to liquidate the bank was passed by NSSA in October 2013 approximately a year and half after they had purportedly taken control. NSSA’s current conduct clearly proves they got involved in this bank just out of malice to ensure that its founding shareholders lost its control,” said RFHL.

RFHL said it objected the involvement of NSSA in the bank on grounds that an investor willing to inject about US$140 million had been secured with all necessary agreements signed.

In a Memorandum to Parliamentary Portfolio Committee on Public Accounts this week, NSSA general manager Mr James Matiza confirmed some pending litigations.

He said this was the reason why the bank wanted to start a micro finance institution which the authority “would be free of the pending litigation which would die with the Capital Bank liquidation.”