Zamco tar­gets year-end for loans buy-out

Chronicle (Zimbabwe) - - Business - Oliver Kazunga Se­nior Busi­ness Re­porter

THE Zim­babwe As­set Man­age­ment Com­pany (Zamco) says it would have mopped up all the Non-Per­form­ing Loans amount­ing to $750 mil­lion in the bank­ing sec­tor by the end of the year.

The as­set man­age­ment com­pany was es­tab­lished by the Re­serve Bank of Zim­babwe in 2014 to buy out Non-Per­form­ing Loans (NPLs) from com­mer­cial banks col­la­terised loan book.

Zamco, which started ab­sorb­ing NPLs last year, has as at June 30, 2016, ac­quired $528 mil­lion from the bank­ing sec­tor.

Zamco chief ex­ec­u­tive of­fi­cer Dr Cos­mas Kan­hai said once the ac­qui­si­tion of NPLs is com­pleted his firm would then come up with var­i­ous res­o­lu­tion meth­ods to ad­dress the prob­lems em­a­nat­ing from NPLs.

He re­it­er­ated that the as­set man­age­ment com­pany is not ab­sorb­ing loans that were reck­lessly is­sued with­out due dili­gence.

“So far as at June 30, 2016, we had ac­quired NPLs amount­ing to $528 mil­lion from the bank­ing sec­tor and some of th­ese un­der­ly­ing bor­row­ers are now start­ing to ben­e­fit from the restruc­tur­ing that we’re un­der­tak­ing,” said Dr Kan­hai while ad­dress­ing del­e­gates dur­ing a break­fast meet­ing or­gan­ised by the Direc­tors Pro­tec­tion Coun­cil of Zim­babwe in Bu­l­awayo yes­ter­day.

“Some of the loans we’re restruc­tur­ing into long term loans, oth­ers we’re con­vert­ing into pref­er­ence shares and also con­vert­ing into eq­uity shares de­pend­ing on the busi­ness model of those com­pa­nies. We ex­pect to con­clude the ac­qui­si­tion phase by end of De­cem­ber this year.”

After ac­qui­si­tion of the NPLs, Dr Kan­hai said, debt eq­uity con­ver­sion is among the var­i­ous res­o­lu­tions they were us­ing to ad­dress NPLs. He re­it­er­ated that Zamco was buy­ing out NPLs with a fo­cus to clean up the fi­nan­cial ser­vices’ sec­tor bal­ance sheets so that the in­sti­tu­tions can con­fi­dently trade and lend.

Dr Kan­hai said the as­set man­age­ment cor­po­ra­tion was not only look­ing at ben­e­fit­ing the bank­ing sec­tor but also fo­cused on as­sist­ing the bor­row­ers.

“We’re not only look­ing at ben­e­fit­ing the bank­ing sec­tor by hiv­ing off the toxic as­sets but we’re also look­ing at the un­der­ly­ing com­pa­nies (bor­row­ers) by as­sist­ing them where we see there is scope for that com­pany to turn around if it’s as­sisted in terms of restruc­tur­ing the loan.

“Be­sides act­ing with the com­pa­nies as well, there are some com­pa­nies that are un­der ju­di­cial man­age­ment, we also work hand-in-hand with ju­di­cial man­agers when they look at com­ing up with a scheme of arrangement where we can see how best we can re­struc­ture the le­gacy debt that is in­her­ent in the bank­ing sec­tor,” he said.

Zamco’s strat­egy for fund­ing NPLs com­prises a num­ber of op­tions that in­clude Gov­ern­ment fund­ing through long-term debt in­stru­ments ap­proved in the 2015 Na­tional Bud­get state­ment.

At present, he said, com­pa­nies do not come di­rectly to Zamco on mat­ters re­lated to NPLs.“One may ask how do I make my loan that I hold with a bank come to Zamco, cur­rently un­like other coun­tries like Nige­ria, that have got sim­i­lar or­gan­i­sa­tions that have got a law that com­pels banks to send all NPLs to Zamco, in Zim­babwe it’s a will­ing buyer will­ing seller. So as a com­pany you don’t come di­rectly to us.

“You ap­proach your bank and in­quire whether your bank is will­ing to sell the NPL to Zamco be­cause it’s a will­ing buyer-will­ing seller,” he said.

The Cen­tral Bank has pointed out that some of the bank fail­ures ex­pe­ri­enced in the re­cent past were due to NPLs.

The mone­tary au­thor­i­ties are on record say­ing al­though about six banks were closed in the past cou­ple of years, since 2009 the fi­nan­cial ser­vices sec­tor has re­mained gen­er­ally safe and sound.

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