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Despite the bailout of Mozambique’s fourth largest bank, Moza Banco, the financial system as a whole “is in good health”, according to the director for banking supervision of the Bank of Mozambique, Joana Matsombe.
Addressing a Maputo press conference on Monday, Matsombe said that the average solvency ratio in Mozambican banks is 15 per cent, almost double the minimum requirement of eight per cent.
The average return on equity is also 15 per cent, and the average return on assets is 1.3 per cent, which she described as “within international standards”.
“There is no reason for alarm”, said Matsombe since the liquidity problem was restricted to Moza Banco.
The problems at Moza Banco had occurred this year – in mid-2015 the bank’s solvency ratio was healthy, and it was only in 2016 that the ratio fell below the minimum required.
Matsombe said the main cause was the failure of the shareholders to recapitalize Moza Banco, even though a shareholders’ meeting had decided to recapitalize. “They did not fully comply with their own decision”, said Matsombe. “They only complied with it 80 per cent”.
On top of the failure to inject new capital was Moza Bank’s ambitious expansion programme. The bank’s fixed assets grew substantially, as it opened new branches across the country, and there were also significant increases in administrative costs.
Matsombe did not believe that bad loans had played a significant role in Moza Bank’s downfall. Non-performing loans amounted to eight per cent of total loans. Although this was higher than the average figure of 5.3 per cent in the Mozambican banking system, Matsombe did not regard it as particularly damaging.
The Bank of Mozambique had held a series of meetings with Moza Banco, at which it called for an adjustment plan from the bank’s directors which could restore normality. Emergency measures were taken, including restrictions on new loans and a ban on new deposits.
None of this was sufficient, and on Friday the Bank of Mozambique intervened, suspending the Moza Bank Board of Directors, and appointed a provisional three member board, chaired by Joao Figueiredo, a former chief executive office of the country’s largest commercial bank, the Millennium-BIM.
The task of the provisional board, said Matsombe, is to stabilize Moza Banco and prepare it for sale. “We do not intend to stay there”, she added. “Our task, as the regulator, is not to manage banks”.
She said that Moza Banco will be sold as a whole, and will not be broken up. “Anyone who wants to buy the bank must have enough capital”, she warned. She expected the bank to be sold within six months, “but if that period needs to be extended, it will be”.
Matsombe could not say whether any of the Moza Banco employees would be made redundant – that would be a decision for whoever purchased the bank.
Monday was the first day of business after the central bank took over Moza Banco, and all seemed normal, with no rush of clients to withdraw their money. “There was no run on Moza Banco or any other bank”, said Matsombe. “There is no cause for panic”.
She guaranteed that “there will be sufficient liquidity for Moza Banco to operate”, though the Bank of Mozambique had no intention of becoming a shareholder in Moza Banco.
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