The Bank of Zambia (BOZ) has confirmed that there is only one Bank in Zambia that is wholly owned by local Zambians following the takeover of Investrust Bank due to insolvency.
Responding to the Zambian Business Times – ZBT query on whether there is any bank remaining that is locally owned after the repossession of the Investrust Bank which was locally owned, BOZ Governor Dr. Denny Kalyalya explained that the Country only has one locally owned Bank, the Zambia Industrial Commercial Bank – ZICB as others are a mixture of institutions that are partly owned by local Zambians and foreign-owned.
“Yes, we have Zambia Industrial Commercial Banks which is totally locally owned at the moment. Now with that what we have is a mixture of institutions that are partly locally owned and others that are not. We take Zanaco for instance with such a significant local shareholding, we also take Indo Zambia Bank which also has significant local sharing.” Said Dr. Kalyalya during the question and answer time after giving an update on the Investrust Bank Plc Repossessed.
“Remember that even the ZICB also arose out of a situation like this but that was rescued by depositors because we went to them to say it either we go for liquidation in which case you lose almost completely or you can convert your deposits into equity and indeed they responded to that and that’s how come you have NAPSA which almost all of you who are employed are subscribing to meaning you are part owners of Zambia Industrial Commercial Bank in which the other shareholder is Industrial Development Corporation which is another local entity and the third shareholding is the Workers Compassion Fund Board, making the bank a wholly locally owned.”
Dr. Kalyalya noted that “it hurts us obviously as Zambians not to see any of our people being in this space but that is what we have. We have to deal with what we have until people step forward. The central Bank is a regulator which does not run these institutions so we only follow the rules which are applicable to everyone.”
He said it is however important to bear in mind that when BoZ as a regulator is applying these Prudential rules they apply across the board which means that does not exempt the indigenous from the same. “The moment you step in the space of saying you are a Bank there are rules and procedures that apply that’s why in the vetting process you ask people if they are familiar with the provision of the law and with the business of Banking, so we look at the business model.”
Meanwhile, Dr. Kalyalya said Investrust Bank was possessed because it was insolvent adding that the institution’s assets were not enough to meet its liabilities. “Insolvency simply means that the capital position of Investrust was below zero (negative) and its liabilities exceeded its assets.”
Kalyalya said at the point of taking possession, it was estimated that the amount of capital required for the bank to be compliant was in the order of K850 million which is a preliminary position that will only be confirmed once the preparation of the Statement of Affairs concludes in six weeks and the Bank will provide clarity on what this means.
He added that in addition, the bank had pre-existing liquidity challenges that became serious in recent months, which compelled it to resort to expensive short-term funding sources, which clearly indicated that the operations of the bank were unsustainable thereby prompting the Bank of Zambia to step in and protect the depositors.
“May I now take this opportunity to assure the depositors that their deposits are safe as the Government has been asked to provide support of K1 billion to bridge the gap between the assets and liabilities of Investrust (In Possession). We are currently working hard to have the statement of affairs prepared within six weeks from now and to have options prepared for how we will resolve Investrust (In Possession). During this period, some payments will be made to depositors and we expect all depositors to have full access to their funds, on the basis of the statement of affairs as of April 2, 2024, once the Bank of Zambia Board has decided on the resolution option,” said Dr. Kalyalya.
Meanwhile, Bank of Zambia Deputy Governor – Operations, Dr. Francis Chipimo noted that the first payment to depositors at the Investrust Bank will be made on April 26, 2024 adding that the first payment will represent 90% of all deposits from about 57,000 deposit accounts.
“As you all know, the Bank of Zambia took possession of Investrust on April 2, 2024, and it is now designated as Investrust (In Possession). This involved us sending staff to each of the 20 branches (including the head office), located in six provinces. Over a period of five to six days, Staff verified monies held by the branches and secured important documents and assets. Investrust Bank (In Possession) staff at the branches were addressed by Bank of Zambia staff as we took possession and they have been requested to remain at home, whilst the possession proceeds. Where needed selected Investrust staff are assisting the Bank of Zambia officials in their activities and further guidance will be provided to all staff as the possession proceeds.”
He said the Bank of Zambia will facilitate the first payment to all depositors up to a maximum of K500,000 (Kwacha Five Hundred Thousand). This payment will cover over 90.0 percent of the total deposit accounts. For clarity, this means that those who have deposits at or below K500,000 will get payments that fully cover their deposits during this first payment.
Dr. Chipimo however added that customers with outstanding loans will still need to remain current on their loans and will be advised where to make their loan repayments. “We hereby request all borrowers to continue servicing their obligations to Investrust Bank Plc (In Possession) once the information is shared.”
