‘O Nosso Banco’: Tight limit on reimbursing clients of failed bank – AIM report

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‘O Nosso Banco’: Tight limit on reimbursing clients of failed bank – AIM report

8:03 CAT | 14 Nov 2016

www.nossobanco.co.mz (File photo)

Compensation for depositors with Mozambique’s insolvent “O Nosso Banco” is limited to 20,000 meticais (about 267 US dollars at current exchange rates).

The Bank of Mozambique on Friday announced that it was cancelling the licence of “O Nosso Banco” to trade. This small commercial bank is in such poor condition that it will not be sold or restructured. Instead, the central bank has simply decided to liquidate it.

The bank’s depositors can get some of their money back from the Deposits Guarantee Gund (FGD) run by the Bank of Mozambique.

But, under a Ministerial decree of September, the amount of compensation depositors will receive if their bank goes bankrupt is strictly limited. Only individual account holders resident in Mozambique, with accounts denominated in meticais, will receive any money at all. Companies or other institutions with accounts at “O Nosso Banco” will receive nothing.

The depositors will receive their money over the next three months, and the FGD will contact each of them to inform them when and where they can pick up the money. Since the limit on reeimbursing deposits is 20,000 meticais, anyone unwise enough to place large sums with “O Nosso Banco” will see much of their savings wiped out.

Since “O Nosso Banco” was a very small bank, its collapse cannot directly harm many people. It had a head office, three branches and eight ATMs, all in Maputo. According to its annual report for 2015, the bank had 2,399 clients (only 466 of whom had debit cards), and 76 workers.

A good number of the clients must be small companies or other institutions, since total client deposits in 2015 were 3.438 billion meticais, which is an average of 1.4 million meticais per client.

“O Nosso Banco” was largely owned by the National Social Security Institute (INSS), which held 77.2 per cent of the shares. Questions are bound to be asked as to why the INSS invested money intended to pay pensions and other benefits for Mozambican workers into a tiny bank which never had any prospect of becoming a serious player in the Mozambican financial system.

Source: AIM