ZB trails behind on  capital requirements

Enacy Mapakame Business Reporter
MORTGAGE lender ZB Building Society is the only financial institution yet to meet the prescribed minimum capital requirements as it trails behind its peers that have more than trebled their capitalisation levels.

According to statistics from the Reserve Bank of Zimbabwe, ZB Building Society’s core capital as at December 31, 2016 was at $16,9 million against the prescribed minimum capital requirement of $20 million.

However, at corporate level, ZB Building Society’s current capital represents a 7,64 percent increase from its prior year’s core capital of $15,7 million.

The financial service provider’s parent company ZB Financial Holdings had been hamstrung by illegal sanctions imposed on it by the United States of America.

Notwithstanding, ZB Financial Holdings’ commercial banking has in fact exceeded minimum capital requirements at $55,1 million, against minimum requirement of $25 million for commercial banks.

Last October, ZBFH and the Zimbabwe Fertiliser Company were finally removed from the illegal sanctions list, a situation analysts said would help the institutions’ ability to access lines of credit going forward.

Other building societies — CABS, FBC Building Society and POSB are all above minimum capital requirements with their core capital at $117,6 million, $40,8 million and $40,5 million in that order.

Newest member, the National Building Society, which was launched last year, has met its minimum capital requirement at $21,9 million as at December 30, 2016.

In his 2017 Monetary Policy Statement, RBZ Governor Dr John Mangudya indicated all operating banks had met capital requirements, boosting the market’s confidence in the country’s banking sector.

“As at December 31, 2016, all operating banking institutions were in compliance with the prescribed minimum capital requirements.

“The banking sector is safe and sound with strong capital cushion that may be utilised in times of stress.

The banking sector’s aggregate core capital increased by 7,48 percent, from $1,07 billion to $1,15 billion during the quarter ended December 2016 on the back of satisfactory earnings performance,” said Dr Mangudya.

In addition to this, the RBZ indicated capital adequacy ratio, a measure for solvency stood at 23 percent as at December 31, 2016. This was above the regulatory threshold of 12 percent.

All banks complied with the minimum required capital adequacy and tier 1 ratios of 12 percent and 8 percent respectively.

“The Reserve Bank is monitoring implementation of the banking institutions’ capital plans and progress towards compliance with the 2020 minimum capital requirements,” said Dr Mangudya.

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