Central Bank guarantees Finance bank deposits with K1.3 trillion

The Bank of Zambia (BoZ) has guaranteed all deposits at the supervised Finance Bank.

The Watchdog has been informed that the central bank has moved K1.3 trillion (One trillion and three hundred billion) to the bank which is currently under national spotlight.

The guaranteeing by the central bank means that no depositor will lose their money even those depositors who are likely to panic by the fabrications and propaganda that there is a run on the bank.

A source at Central bank explained to the Watchdog that, with that money at Finance bank, it means that if any depositor walks to finance bank to get his money today, he will find it and withdraw it. The source explained that the move was aimed at protecting the bank from suffering a run where depositors withdraw their money in huge quantities at once.

The source also explained that the total deposits at Finance bank by private individuals and private companies is around K350 billion and that the bulk of the deposits accounting fort more 60 per cent are from government departments.

The Bank of Zambia last week took over Finance bank following a report that exposed fraud and unsound banking activities by its owners and senior directors.

The report notes that the bank was used as a cash-cow by certain individuals and companies. There was, according to the report, strange loans and overdrafts in some instances without collateral.

Among the companies that owe Finance bank loans and obligations that have been categorized as bad and being investigated for breach of law is Zambezi Portland Cement which owes K100 billion (One hundred Billion), Radison Hotel which owes K100 billion (One hundred Billion), the Food Reserve Agency (FRA) K150 billion (One hundred and Fifty billion), defunct Zambian Airways which owes the bank K40 billion and the Post newspapers which owes the bank K36 billion.

The Zambia Daily Mail limited owes Finance Bank K15 billion (Fifteen billion) but this is not categorized as a bad debt because it is serviceable and was procured with all requirements satisfied.

Former owners and senior directors of the bank are being investigated and are likely to face various criminal charges as contained in the financial and banking act of Zambia.

The bank is being managed by First Rand of South Africa but the Watchdog understands that it will be sold at a letter stage.

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