AFRASIA Bank Zimbabwe, founded as Kingdom Financial Holdings by Nigel Chanakira, has collapsed after the central bank confirmed the cancellation of its licence on Tuesday.
Chanakira had inauspiciously exited the struggling institution after its takeover by Mauritius-based AfrAsia banking group in a development that was expected to help revive its fortunes.
AfrAsia took up a 35 percent interest in the then Kingdom Financial Holdings for about US$9.5 million in the bank in 2012 as the local bank struggled to meet new capitalisation requirements.
The group was then rebranded AfrAsia Zimbabwe Limited.
Cancellation of its licence comes follows the collapse of Allied Bank which was owned by transport minister Obert Mpofu as the inclement economic conditions and management malfeasance take their toll on locally-owned banks.
In a statement, the Reserve Bank of Zimbabwe (RBZ) said AfrAsia surrendered its licence.
“Members of the public are advised that on 24 February 2015, the Registrar of Banking Institutions cancelled AfrAsia Bank Zimbabwe Limited’s licence,” said the RBZ.
“The cancellation followed board resolutions by AfrAsia Zimbabwe Holdings Limited and AfrAsia Bank Zimbabwe Limited to voluntarily surrender the banking licence.
“The Registrar has determined that the banking institution is no longer in a safe and sound condition in that the institution is grossly undercapitalised and is facing chronic liquidity challenges.
“All efforts by the shareholders to recapitalize the institution in order to comply with the minimum capital requirements have failed.
“In addition, the board of directors advised that AfrAsia Bank Limited was constrained in availing any further support to the Zimbabwe operations.
“In view thereof, the Registrar has determined that cancellation of the licence is in the best interests of the institution’s depositors, creditors and members.
“The Reserve Bank has accordingly applied for the liquidation of the institution in terms of section 57 of the Banking Act.”
The bank was however a subscriber to the Deposit Protection Corporation, meaning small depositors will likely get their money back.
The RBZ added: “Members of the public are also advised that negotiations are at an advanced stage for the acquisition of Microking Finance (Private) Limited by a potential investor.
“In the meantime, the microfinance institution shall, however, be closed in order to protect the group’s assets.”