Harare Correspondent

Zimbabwe™s central bank yesterday shut down a commercial bank, Royal Bank of Zimbabwe, which was teetering on the brink of bankruptcy, and placed it under the management of curator Robert McIndoe for six months. Royal Bank is the sixth bank to be closed down this year by the central bank as the government struggles to maintain stability in the financial services sector. Of Zimbabwe’s 41 banking institutions, six are under curatorship, two are in liquidation and four are receiving rescue packages from the central bank. Thousands of depositors have been unable to withdraw their savings as a result, and many are returning to established international banks such as Standard Chartered, Stanbic Bank and Barclays Bank. Royal Bank has been facing liquidity problems since December last year due to a high risk on deposits.Its clients also lost confidence in it after a 25% shareholder, Victor Chando, under investigation for questionable foreign currency dealings, fled the country.

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. The central bank said in a statement that Royal Bank was placed under curatorship to protect “depositors, preserve the assets of the bank and protect the stability of the financial system”. “In particular the bank is facing serious liquidity and solvency problems, which are attributable to poor corporate governance practices,” it said. The spotlight fell on Royal Bank two weeks ago when it became locked in a public row with the troubled insurance giant, First Mutual Life. The two companies are embroiled in a wrangle involving Z60bn, which Royal Bank is said to owe First Mutual Life’s asset management arm First Mutual Asset Management in interest. The commissioner of insurance, pension and provident funds has appointed KPMG to investigate the dispute.

Source: WWW.ZwNews.Com