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7th Zim bank closed
19/12/2004 10:52 - (SA)
Harare - The state central bank shut down the seventh private bank in Zimbabwe's troubled financial sector on Saturday.
The Reserve Bank said in a statement it froze all dealings of the CFX Bank for six months and appointed an independent regulator or curator, to supervise the bank's affairs.
CFX Bank, a former foreign exchange dealership, was found to be in an unsound financial position with a shortage of cash reserves that caused a run on the bank's branches by nervous depositors earlier in the week, the central bank said.
Along with severe liquidity problems and negative capitalisation, CFX Bank was affected by "poor risk management, poor corporate governance and imprudent banking practices", the bank said.
This year, six other private banks have been put under the administration of independent accounting experts to try to save them.
None have reopened and many depositors are still waiting to claim their money.
All the suspended banks are among a dozen local banks given licenses by the government after it said it wanted to break a banking monopoly traditionally held by the main international banks.
Zimbabwe is suffering its worst economic crisis since independence with an inflation rate of 149% - the highest in the world - and soaring unemployment.
Since 2000, the agriculture-based economy has been crippled by the often violent seizure of thousands of white-owned commercial farms.
Shortages of petrol, food, hard currency and even local bank notes spurred speculation that gave finance houses a boom, but the boom collapsed when borrowers failed to repay speculative loans.
- AP
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Zimbabwe Special Report
