Harare – The Zimbabwe Asset Management Company (ZAMCO) said as at December 31, 2018 it had resolved NPLs totalling $251.46 million, which is a 22 percent resolution rate since the beginning of the resolution phase in April 2017.

ZAMCO is a special purpose vehicle set up by the RBZ to resolve the high levels of NPLs that bedevilled the banking sector following the introduction of a multicurrency trading system in February 2009.

ZAMCO’s NPLs resolution policy provides for a number of resolution options for acquired loans including loan restructuring which involves extending loan repayment period to 8 years reducing interests to between 6 and 10 percent, debt to equity conversion, debt-asset swap and private treaty sales where borrowers give ZAMCO properties to sell and use the proceeds to pay off or partially reduce their loans among others.

According to Mangudya, the level of NPLs in the banking sector rose around 1.09 percent as at December 31, 2009 to a peak of 20.14 percent ($815.90 million) as at September 30, 2014. This high level of NPLs saw a number of banks closing during the period 2003 to 2006 because of their exposure to NPLs.

 Presenting oral evidence to Public Accounts Committee, the RBZ chief said the resolution which began in April 2017 has progressed well having surpassed the target of NPLs of 12.5 that should be resolved in any one-year period.

Out of the $251.46 million that has been fully resolved, ZAMCO received cash and other assets amounting $258.49 million representing a recovery rate of 103 percent.

After removing the resolved NPLs, ZAMCO remains with a book of $882.71 million of acquired values.

The performance of ZAMCO since it commenced the resolution stage (18 months) compares well and even better with countries that formed public asset management companies to resolve NPLs.

Examples are Slovenia which had a recovery rate of 26 percent over a period of 4 years after the start of the resolution phase. Korea’s recovery rate stood at 48 percent over a period of 7 years whist that of Spain stood at 20 percent over 5 years.

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