A New Zealand based investor, Worldwide Capital Corp, plans to invest over $2,2 billion in establishing and financing operations of a new commercial bank in Zimbabwe, according to documents seen by Business Weekly.
Registered already as Diamond Bank Ltd, the investor has received—in principle–approvals from the Reserve Bank of Zimbabwe after meeting general licensing conditions for a commercial bank.
The breakdown of the investment and timelines for deployment of the funds were, however, not immediately available but sources close to the development indicated this would entail lines of credit to various sectors of the economy, with much bias towards infrastructure and agriculture as well as capitalisation of the new financial institution.
“I would say it is an investment of substance,” said one source close to the deal. “Being a commercial bank, Diamond Bank will target all sectors of the economy but with much bias towards infrastructure development and agriculture industry.”
RBZ registrar of banking institutions Norman Mataruka wrote to Diamond Bank early this year advising that the central bank was “agreeable” to the bank’s registration.
“Our assessment of the financial conditions, corporate governance and risk management structures of Diamond Bank show that Diamond Bank has generally met licensing conditions for registration as a bank,” wrote Mataruka on February 2 in documents in possession of Business Weekly.
Bank Approval The approval is subject to the fulfilment of certain conditions including vetting documentation for the proposed senior management officers, membership and terms of reference of board and management committees and a minimum capital of $25 million. “We further advise that in terms of Section 16 of the Banking Act, commencement of the bank will be subject to pre-opening inspection by the Reserve Bank of Zimbabwe to verify institution preparedness in terms of requisite infrastructure adequacy of risk management and corporate governance systems.
“In the meantime, we shall be conducting the prescribed consultations with the Minister of Finance and Economic Planning in terms of the Bank Act.” Diamond was also advised to obtain approvals from the Zimbabwe Investment Authority.
While no comment could be obtained from ZIA, Business Weekly, has it on good authority that the approvals have been secured.
The sources said Diamond Bank will use Zimbabwe as an entry point into the region. Recently, President Mnangagwa said the Zimbabwean economy had over the past 10 years experienced limited affordable long term financing due to high country risk.
“We therefore, invite players in the financial services sector to come and establish financial institutions that offer appropriate financial solutions and packages for the unique realities of Zimbabwe and the region,” said the President.
Zimbabwean banks are failing to raise meaningful lines of credit due to perceived country risk.
Zimbabwe’s economy require lines of credit of between $4 billion to $5 billion annually to fund acquisition of capital equipment and working capital, Finance and Economic Planning Minister Patrick Chinamasa told Business Weekly in an interview on Tuesday. Zimbabwe’s banking sector is composed of the 13 commercial banks, four building societies a savings bank and two development financial institutions.
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