CTA chief continues attack on Central bank – AIM report

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CTA chief continues attack on Central bank – AIM report

7:51 CAT | 23 Nov 2016

File photo / A branch of O Nosso Banco

The chairperson of the Confederation of Mozambican Business Associations (CTA), Rogerio Manuel, on Monday renewed his bitter campaign against the Bank of Mozambique, accusing it of “bad faith” because of its decision to liquidate “Nosso Banco” (Our Bank), one of the smallest and least viable of the country’s commercial banks.

Speaking to reporters after a meeting between the CTA leadership and the Mozambican Association of Banks, Manuel argued that, despite its evidently toxic nature, Nosso Banco should have been rescued just as, in September, the central bank rescued another struggling commercial bank, Moza Banco, and allowed it to continue trading.

Cited by the independent television station STV, he claimed that the problems of Nosso Banco were similar to those of Moza Banco. “If the central bank intervened in Moza Banco, then Nosso Banco deserved the same treatment”, he protested.

Manuel thus showed that he had paid no attention to last Friday’s press conference given by the Bank of Mozambique, where the difference between the two failing banks was clearly explained.

Nosso Banco was a tiny outfit, with just three branches and eight ATMs, all in Maputo city. It had 5,116 individual depositors, and 987 businesses also held accounts there. Clearly its assets were minimal.

But Moza Banco, according to Alberto Bila, of the central bank’s board of directors, had plenty of assets, with 48 branches throughout the country. It also had a solid client base, with 93,000 individual depositors and 8,238 corporate depositors. There was no reason why Moza Banco could not become a going concern again, said Bila, and there were already potential buyers interested in purchasing it.

The shareholders still own Moza Banco, and if they could raise the money to recapitalize the bank, they would be allowed to do so.

Moza Banco had six per cent of deposits in the banking system and 7.71 per cent of banking assets. Nosso Banco, on the other hand, only had one per cent of assets and 1.33 per cent of total deposits.

For the central bank, Moza Bank, with a significant position in the financial system, was worth saving, but for Nosso Banco the only conceivable solution was to revoke its licence and liquidate it. Both banks had serious liquidity problems, but Nosso Banco’s had reached the point where it was running out of money to meet its obligations to its clients.

Manuel also claimed that other banks were in a similar situation to Nosso Banco and could collapse – even though such claims had been flatly denied by the central bank on Friday. For the second time, Manuel specifically targeted the Mozambican branch of the Nigerian United Bank for Africa (UBA), suggesting that it would be the next bank to fail.

Such statements by the main who claims to speak for Mozambican business seem like a deliberate attempt to spread panic and start a run on the banks.

UBA has replied to Manuel’s attack of last week in a letter to its clients. The UBA-Mozambique Chief Executive Officer, Helder Chambisse, said the bank is in a stable financial situation “maintaining its activities normally and within the parameters defined by the Bank of Mozambique”.

Chamisse said that UBA has a solvency ratio of 14.64 per cent, well above the eight per cent minimum demanded by the central bank. (The solvency ratio is calculated by dividing net income and depreciation by total liabilities).

Further, UBA is an international bank, operating in 22 countries (including the US, Britain and France). Chamisse added that UBA has total assets of over 13.5 billion US dollars, and own funds of over 1.6 billion dollars. Over the past year UBA had injected an additional 11 million dollars into its Mozambican operations.

This, Chamisse said, gave the bank “the necessary resources to implement its strategy for sustainable growth and profitability”.

Source: AIM