Omega Ukama 
ZB FINANCIAL Holdings (ZB) last week said it will soon finalise the merger of its bank and building society.
ZB Financial Holding CEO, Ron Mutandagayi.
The merger between ZB Bank and ZB Building Society, which is meant to “improve operational efficiencies,” and address capitalisation compliance, was initially announced in 2014.
“The group faces a compliance burden going forward, following the review of the minimum capital requirements,” Pamela Chiromo, ZB’s board acting chairperson, said in the group’s results for the year ended December 31, 2019 adding that the group “intends to maintain a Tier-1 banking licence and this will be partially met through finalising the merger of ZB Bank and ZB Building Society in order to lessen the compliance burden”.
“Capital resources will be augmented through retention of reserves and, possibly, fresh equity,” she said.
ZB Bank recently met the previous capital threshold of $100 million, but the Reserve Bank of Zimbabwe (RBZ) revised the capital floor for Tier-1 institutions to US$30 million soon after.
This also comes as experts have warned that Zimbabwe’s financial institutions face the risk of falling into a liquidity trap following the central bank’s directive to increase and denominate minimum capital thresholds in United States dollars. Before the recent revision, banks had been handed a respite in February last year when the RBZ introduced the Zimbabwe dollar and pegged a minimum capital requirement of $100 million instead of the initially recommended US$100 million.
Reserve bank governor John Mangudya then told The Financial Gazette that he was inclined to a moral suasion approach to the situation.
“We are not revising the figure now because we believe that the banks should improve their management skills on their own,” he said.
Meanwhile, as the Zimbabwean economic prospects are expected to remain tenuous, and the advent of the Covid-19 pandemic has worsened the situation, the group says it will continue to focus on the preservation of capital and assets.
“To this end, investment opportunities that offer growth prospects will be taken while operations will be re-calibrated to offer improved service to customers at a reduced cost leveraging on technologies. Increased focus will be placed on the group’s human capital which has always been the key source of competitiveness in a challenging environment,” Chiromo said.
The chairperson also said the group has dealt with all governance issues which were the subject of a corrective order issued by the reserve bank in 2017 and now awaits the lifting of the order.
