HARARE – Embattled Interfin Banking Corporation (IBC) is courting Russian investors to inject fresh capital in a bid to resuscitate its banking unit — Interfin Bank, businessdaily has established.
One of the Interfin’s shareholders confirmed the financial services group — currently under curatorship — is in talks with investors, but could not reveal their identity.
“Yes we are engaging investors, but I can’t disclose them at this point in time,” he said on Monday.
However, sources close to the development told businessdaily that two Russian investors had expressed interest in injecting $100 million plus to recapitalise the troubled institution.
Peter Bailey of KPMG Chartered Accountants is IBC’s curator.
Bailey, who is expected to recommend the way forward on IBC’s future at the end of the curatorship in June, said he was not at liberty to disclose any developments.
“My mandate is to rescue Interfin out of its crisis and it is beyond my jurisdiction to comment on the issue you have raised,” he said.
Last year, the Reserve Bank of Zimbabwe (RBZ) extended IBC’s curatorship by six months following revelations of gross mismanagement, which led to the institution’s demise.
The central bank said it had placed IBC under “recuperative curatorship”.
“Take notice that the RBZ in full has extended the period of curatorship for Interfin Bank Limited from December 11, 2012 to June 9, 2013. At the same time, the Reserve Bank has extended the appointment of the curator accordingly,” the central bank said.
Interfin, was at its closure deemed to be in an “unsafe and unsound” financial position owing to under capitalisation, allegations of abuse of corporate structures, high levels of non-performance insider loans and other corporate ills.
“The primary purpose of the curatorship is to protect depositors, preserve the assets of the Interfin Bank Limited and protect the stability of the financial system,” the RBZ said upon closure of the bank.
KPMG had recommended Bailey to consider civil action and criminal charges against the directors and shareholders of the bank.
The auditing firm unearthed four critical events that caused Interfin Bank’s liquidity crunch.
The first was that the directors and shareholders forced the bank to borrow expensively from the market and on-lend these funds to parent company Interfin Holdings.
In turn, Interfin Holdings used the borrowed funds to capitalise its banking subsidiary.
“Capital created this way was thus not sustainable as the risk of gain and loss in the capital created was with Interfin,” the KPMG report said.
Second, the bank was exposed as its assets were used to back speculative activities, for instance, in Art Corporation and Starafrica Corporation where it lost a massive $9,5 million. – Kudzai Chawafambira