Banks freeze out ailing companies
THE Directors Protection Council of Zimbabwe (DPCZ) is fighting to save Bulawayo companies sinking in bank debts pleading with financial institutions to transfer their non-performing loans (NPLs) amounting to $1 million to the Zimbabwe Assets Management Corporation (Zamco).
A number of Bulawayo companies are teteering on the brink of closure after banks swooped on them auctioning their properties to recover money which was borrowed by the companies. DPCZ chief executive officer Mr Reggies Sibanda said a number of financial institutions were reluctant to classify their loans as non-performing and transfer them to Zamco to allow the companies some space to try and regroup.
“DPCZ has compiled a list of all companies belonging to its members which were advanced bank loans that were secured by collateral in the form of immovable properties. Zamco is a special vehicle created by Reserve Bank of Zimbabwe to absorb all NPLs with security. However, that call on the banks has fallen on deaf ears because banks are dragging their feet to handover the NPLs,” said Mr Sibanda.
He said most of the organisation’s members have approached the Bankers Association of Zimbabwe (BAZ) seeking it to intervene.
“We have plenty of our members who are facilitating a dialogue with BAZ. We have listed down these loans and collectively forwarded them to BAZ. Zamco is trying to revive those companies with NPLs by taking over the loans and restructure a new payment plan based on the individual company,” said Mr Sibanda.
This publication is in position of a letter by DPCZ addressed to BAZ president Dr Charity Jinya seeking the organisation to issue a directive to various banks to release their NPLs of four companies (names stated).
“T h e listed nonperforming loans are secured by mor t gage bonds and qualify for acquisition by Zamco. We trust that no banking institution will deny these companies from reviving their businesses. Please release the following companies’ (names stated) loans to Zamco so that they receive their well deserved survival aid from Zamco,” read part of the letter. Mr Sibanda said the failure by Zamco to absorb the NPLs of the identified companies was hampering their revival. “As DPCZ, we are saying companies with a chance of bouncing back into business must not be denied a chance to revive themselves,” he said. DPCZ has also been engaging relevant stakeholders in an effort to curb auctioning of immovable properties. “DPCZ has been of late conducting meetings with other stakeholders like Sheriff of the High Court, Law Society of Zimbabwe and is still to meet all auctioneers on the panel of the Sheriff of Zimbabwe, Messenger of Court and other relevant stakeholders. “These meetings seek to find solutions towards solving problems of auctioning immovable properties of our members who owe banks. In our perceived view, this is an opportunity that has presented itself to our members with non-performing loans and it has to be utilised fully,” said Mr Sibanda.
BAZ advocacy and marketing executive Mr Clive Maphambela said companies that feel banks are reluctant to release their NPLs should seek an amicable solution of addressing the issue with the respective financial institutions and Zamco.
“We are just a third party in this matter and it has nothing to do with us as an institution. We cannot come into or influence an agreement between a bank and its customer. My advice to the companies is for them to solve the matter with the respective banks and Zamco. In any case banks voluntarily release their bad loans to Zamco,” said Mr Maphambela.
Zamco chief executive Dr Cosmas Kanhai said banks were not obliged to sell their NPLs.
“There is no law in Zimbabwe that compels banks to sell their NPLs to Zamco even if the loans appear to be meeting the criteria for acquisition. NPLs are purchased on a willing buyer, willing seller basis and there is no obligation for a bank to sell its NPLs to Zamco if it feels it can resolve them internally,” said Dr Kanhai.
He said it must be noted that an NPL is an asset that is owned by the bank.
“It is the owner of that asset (in this case the bank) who has the prerogative to sell it or not. This means the borrowers cannot directly approach and request Zamco to take-over their loans from banks. If the bank is not willing to sell the loan then there is nothing Zamco or the underlying borrower can do. We are unable to answer claims of difficulties being faced by distressed companies to re-apply for loans as this is outside the mandate of Zamco,” said Dr Kanhai.