Victims of closed banks get compensation in Zimbabwe

Business Top Stories Zimbabwe

Ndaka Majaka

THE Deposit Protection Corporation of Zimbabwe (DPC) says it has compensated a total of 15 313 depositors who fell victim after their banks folded, since the organization’s inception in 2003.

DPC’s Chief Executive Vusilizwe Vuma said a total of US$3,6 million had been disbursed by the depositor insurance organization whose main mandate is to act as a guarantee scheme which ensures depositors are reimbursed part or all of their deposits in the event of a bank failure.

ZTN Business correspondent Ndaka Majaka’s report on the Deposit Protection Corporation

Since its inception in 2003, DPC compensated depositors of nine failed   banking institutions which were subjected to liquidation, namely: Century Discount House; Rapid Discount House; Sagit Finance House; Genesis Investment Bank; Royal Bank; Trust Bank Corporation; Interfin; Allied Bank; and AfrAsia Bank

“The corporation adopted an aggressive recovery strategy in the year to December 2018, whereby in addition to cash, it started accepting payment by way of treasury bills and immovable assets.

“Cumulative dividend from recoveries paid out by the corporation increased by 140 percent from US$8,5 million in December 2017 (excluding Genesis bank) to US$28,6 million as at 31 December 2018,” Vuma told shareholders at an Annual General Meeting recently.

The DPC also said it had managed to record a 64 percent surge in total recoveries for the six banks presently under liquidation (excluding Tetrad)  from US$30 million in December 2017 to US$49,3 million as at December 31, 2018.

Vuma said total liabilities of banking institutions under liquidation stood at US$284 million against total assets of US$93,4 million as at December 31, 2018 leaving a gap of US$190,6 million.

Presently, DPC’s cover level stands at ZWL$1 000 per depositor per deposit type per contributory banking institution (CBI).

As at May 31, 2019, 95,5 percent of the total deposit accounts were fully covered.

“Payments to depositors of banks that failed in the multi-currency is in-progress,” said Vuma.

The scheme has 27 members, namely: six Deposit-Taking Micro-Finance Institutions, one Savings Bank, one Infrastructure Development Bank, one Merchant Bank, five Building Societies, & 13 Commercial Banks.

Vuma highlighted that the depositor insurance scheme was battling with challenges in selling some assets on time due to liquidity challenges and the adverse macro-economic conditions. He lamented that the fund’s size was still below the target of two percent of total deposits.