By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Zimbabwe through its Central Bank, the Reserve Bank of Zimbabwe has created its own Asset Management Company, Zimbabwe Asset Management Corp (ZAMCO) to help buy non-performing loans (NPLs) from banks according to a report from Bloomberg.
The report said ZAMCO will purchase the loans under commercial terms, and assign collateral and all other rights, the Reserve Bank of Zimbabwe said in its monetary policy statement on Monday.
‘’The company will seek to clean up and strengthen banks’ balance sheets and provide them with the liquidity to fund valuable projects for the economy to rebound and to mitigate loss of confidence,” the Reserve Bank said.
According to Zimbabwe’s Reserve Bank, non-performing loans at Zimbabwean banks swelled to 18.5 percent of total loans, or $705 million, in June from 1.6 percent in 2009.
The report quoted the Harare-based IH Securities as saying in May of this year that the high level of bad debt is the key threat to the country’s banking industry.
The Reserve Bank of Zimbabwe said ZAMCO will finance the purchase of bad loans through a combination of non-funded lines of credit, new inflows, long-term bonds and Treasury bills.
ZAMCO will be supervised by the Reserve Bank of Zimbabwe and has purchased $45 million worth of bad debt from three banks since August 15 the report affirmed.
19 banks currently operate in the country including units of London-based Standard Chartered Plc and Barclays Plc, as well as South Africa’s Standard Bank Group Ltd. (SBK) the report said.
In Nigeria, the Asset Management Corporation of Nigeria (AMCON) was established on the 19th July 2010, when Goodluck Jonathan, the president of the Federal Republic of Nigeria signed the AMCON Act into Law.
AMCON was created to be a key stabilizing and re-vitalizing tool established to revive the financial system by efficiently resolving the non-performing loan assets of the banks in the Nigerian economy.
Mustafa Chike-Obi, managing director (MD) of AMCON in his presentation at a public hearing to the National Assembly in February said AMCON restructured about 50 percent of the its NPL portfolio, about N862 billion, of which, N432.223 billion was collected in cash and property at a recovery rate of over 100 percent of purchase price.
He said also, AMCON has recapitalized five (5) of the Central Bank of Nigeria (CBN) -intervened banks, creating enabling conditions for subsequent mergers with other banks and/or further capitalisation by financial investors, which also ensured that no depositor lost any funds.
