The amount is about 1,5% of the US$6,25 million minimum capital requirement for commercial banks set by the Reserve Bank of Zimbabwe by September 30 and $12,5million by March 31 next year. The banks have 13 days left before the minimum capitalisation deadline to raise the money arrives.
CFX which two months ago released a cautionary statement advising its shareholders that it had recorded a loss for the interim period ending June 30 also had deposits amounting to US$1 260 630 during the same period.
The bank’s total equity and liabilities on its balance sheet amounted to US$3 757 684 on August 31.
Statutory reserves amounted to US$124 634 while loans and advances amounted to US$12 887 during the same period, a position analysts said would not instill confidence indepositors and investors.
The bank was said to be contemplating a US$10 million rights issue to support its operations. This was unlikely to be supported due to liquidity shortages on the market.
The bank has since engaged the Reserve Bank on its plans to raise capital.
Information obtained Thursday suggests that Finance Bank of Zambia was holding on to a US$12 million cash injection into CFX which was about to be bankrolled in its acquisition by parent group, Swiss Reinsurance.
This was after the Zambian bank received a letter from ENG Capital about wrangles over investments and shares in CFX Bank.
Part of a letter by ENG Capital to the Zambian bank reads: “You are receiving this letter as notification of the course of action spearheaded on behalf of ENG Capital and its directors in our efforts to recover at least 309 million and up to 900 million Century Bank shares fraudulently converted into CFX Bank shares.”
“The fraud was masked as a merger between Century Bank and CFX Bank but after the merger Century name was dropped to cover the tracks of the fraud. This dispute was triggered by the special bargain sale of 309 million shares but the total shares owned by ENG were 900 million. The balance was transferred in piece meal fashion to avoid detection of the fraud and transaction laundering that was being perpetrated,” the letter said.
ENG warned: “It is important that your organsiation avoids being a conduit to a money and asset laundering scheme,” reads the letter in part.
The letter alleges that directors of CFX provided false and misleading information to CFX’s auditors and concealed from them their falsification of CFX’s books and records and manipulation of dates recorded in CFX’s general ledger and subsidiary ledgers. This, they allege, made and caused CFX to make untrue statements of material facts.
In December, the Reserve Bank dissolved CFX Bank’s board of directors and removed the financial institution’s senior management after new serialised bank notes issued to the bank were found on the black market prior to the date of the launch.
Formerly Century Bank, the institution was renamed CFX Bank (CFXB) following a merger between CFX Financial Services (CFX) and Century Holdings Ltd in 2004. The bank was placed under the management of a curator on December 17 2004.
CFX applied to merge the operations of CFXB with CFXMB on the grounds that it was not viable to continue the business of the merchant bank separately, as all trading was taking place in the name of CFX Bank Ltd.
The merger was approved by the Ministry of Finance on February 27 2006. Following the determination that CFX Bank Ltd had been resuscitated, curatorship of the bank was uplifted on February 28 2006.