Intervened Mozambican bank: Shareholders fail recapitalization – Regulator

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Intervened Mozambican bank: Shareholders fail recapitalization – Regulator

11:36 CAT | 24 Mar 2017

Shareholders of Moza Banco, subject of a Bank of Mozambique intervention in September last year, have failed to recapitalize the institution to the regulator’s satisfaction, and the injection of capital will continue with other interested parties, Mozambique’s financial system regulator has said.

“The Bank of Mozambique informs all interested parties and the general public that the shareholders of Moza Banco SA have not complied with the requirements established for the exercise of preemptive rights in the recapitalization of the institution,” a statement sent to Lusa reads.

According to the note, Moza Banco shareholders had until yesterday to raise resources necessary to restore the institution’s prudential ratios.

“At the General Meeting held on January 23, 2017, in accordance with the by-laws, the shareholders of Moza Banco SA, in order to restore financial equilibrium and compliance with prudential ratios in force, decided to increase capital, and set the deadline of March 23, 2017 for shareholders to exercise preemptive rights in the recapitalization of the bank,” the Bank of Mozambique communiqué reads.

In the note, the Mozambican financial system regulator emphasizes that the stability of the financial system and confidence in the future of Moza Banco are the main objectives of the ongoing recapitalization process.

To this end, the statement continues, the Interim Board of Directors, in coordination with the Evaluation Committee, will continue to move the recapitalization process forward.

“The Bank of Mozambique assures the market, customers and the general public that Moza Banco SA continues to function normally,” the note adds.

At the end of January, the General Shareholders’ Meeting of Moza Banco, owned by Portugal’s Novo Banco and the subject of regulator intervention in September, approved a capital increase of 8.17 billion meticais (EUR 107.7 million). In December the Bank of Mozambique injected about 8 billion meticais (EUR 105 million) into the institution to forestall collapse and avoid an “earthquake” in the Mozambican financial system.

Two months after the Moza intervention, the bank supervisor liquidated O Nosso Banco, owned by the National Social Security Institute (INSS), and activated the deposit guarantee fund, which provides for a refund of 20,000 meticais (EUR 240.00) for individual depositors, excluding companies.

Despite being a minor bank, O Nosso Banco’s bankruptcy sounded alarms and prompted the central bank to denounce “reasons for panic” and assure the market that Mozambique’s financial system was sound, with an average solvency ratio of 14 percent, well above the 8 percent required by the supervisory body.

Unlike O Nosso Banco, with little more than 5,000 private and 900 commercial clients and only a one percent share of Mozambican banking system assets, Moza Banco has more than 93,000 private and 8,000 commercial customers and a 7.71 percent share. It is the fourth largest bank in Mozambique, with 48 branches across practically the entire country.

Source: Lusa