(Adds detail, background)
HARARE Aug 26 Zimbabwe has set up an asset
management company to buy non-performing loans from banks, the
central bank governor said on Tuesday, a move designed to
restore stability to a sector stung by rising bad debts.
Reserve Bank of Zimbabwe Governor John Mangudya said the
newly-created Zimbabwe Asset Management Corporation (ZAMCO) had
bought $45 million of bad debt from three banks as of Aug. 15,
although he declined to give further details.
"This intervention became necessary to ensure financial
stability," Mangudya told Reuters.
Mangudya first announced plans to set up a vehicle to mop up
bad debt from banks in June. He said President Robert Mugabe's
cabinet had now approved ZAMCO's creation.
Banks have been aggressive lenders to local firms since
Zimbabwe started using foreign currency in 2009, after
hyperinflation rendered the local dollar virtually worthless.
But the impact of indiscriminate lending and an economic
slowdown has since forced some financial institutions to close
after they failed to raise new capital to cover bad loans.
In a monetary policy statement on Monday, Mangudya said 18.5
percent of the $3.81 billion outstanding loans were classified
as non-performing, up from 1.6 percent five years ago.
The central bank has not specified exactly how much of the
$705 million in non-performing loans ZAMCO will mop up, though
the fund is expected to take a majority.
ZAMCO, in which pension funds and local and foreign
investors would have shares, would assume responsibility of
recovering the loans over a longer period of time.
The asset manager will buy the bad debt from banks using
cash and treasury bills at a discount.
Some banks are struggling to stay above water as defaults
grow, forcing them to turn to foreign investors to recapitalise
and undermining President Mugabe's black economic empowerment
Two locally-owned lenders, Tetrad and Allied Bank, were in
distress while Metbank and AfrAsia, majority-owned by
foreigners, were facing solvency and liquidity problems,
Mangudya said in Monday's monetary policy statement.
Last month, the country's finance minister said up to five
lenders, all locally owned, were in distress.
(Reporting by MacDonald Dzirutwe; editing by David Clarke)