Mozambican banks react to bankruptcy rumours with assurances of stability

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Mozambican banks react to bankruptcy rumours with assurances of stability

12:53 CAT | 24 Nov 2016

Lusa (File photo) / A view of Maputo city

Mozambican banks have denied press and social network rumours that they are at risk of going bankrupt, pointing out that the Bank of Mozambique had declared that the system remained solid.

BCI, Banco Mais and United Bank for Africa (UBA) Mozambique denied that their solvency ratios are close to the central bank-defined red line, while BancABC, owned by Atlas Mara, has announced a capital increase.

In a letter to clients that Lusa has access to, the chairman of BCI’s executive committee, whose main shareholders are the Portuguese Caixa Geral de Depósitos (50 percent) and BPI (30 percent), says that the rumours which have been circulating concerning the solvency of Mozambican banks have generated “considerable misinformation”, resulting from “mixed financial concepts” and the central bank’s recent intervention in Moza Banco and its recent liquidation of O Nosso Banco.

“BCI scrupulously complies with all the prudential ratios and binding reserves set by the Bank of Mozambique, as well as all the rules and good practices established at international level, and has undeniable financial strength, as evidenced by the accounts published,” Paulo Sousa wrote.

The BCI chairman, head of one of the leading banks in the Mozambican financial system, pointed out that the bank’s solvency ratio was 14 percent on June 30, well above the 8 percent required by the central bank, and that the recent strengthening of mandatory reserves determined by the regulator “does not constitute any kind of constraint”.

BCI also said, in addition to available resources, “it holds a relevant portfolio of assets eligible for immediate access to additional liquidity”.

Banco Mais – Banco de Apoio aos Desenvolvimentos [Development Support Bank] also reacted to bankruptcy rumours, which it said were causing “confusion and unrest in the market”.

In a letter to clients Lusa has access to, the bank, with Geocapital (44.6 percent) and AfricinInvest (39.6 percent) as its main shareholders, said, “in order to clear up any doubt”, that the financial entity “complies with all Bank of Mozambique regulatory ratios”, including solvency, which is set at 13.02 percent and which will be increased by the end of the year to 25.21 percent when a capital increase is formalised.

BancABC, owned by the Atlas Mara group, announced on its website a capital increase of US$10 million (EUR 9.5 million) to “support major growth initiatives” without reference to the climate of rumours besetting the Mozambican banking system in recent weeks.

A statement by managing director Orlando Chongo said that the capital increase “will raise the capital adequacy ratio of the bank from the current 14 percent verified on June 30 2016, itself already above the 8 percent stipulated by the regulator, to more than 20 percent”.

UBA Mozambique has also denied that its solvency ratio is below the required level, stating that the institution maintains a “prudent” financial situation, with a solvency ratio of 14.44 percent and a “solid reserve position”.

After the central bank took over the management of Moza, part-owned by the Portuguese Novo Banco, and liquidated O Nosso Banco on November 11, the president of the Confederation of the Confederation of Economic Associations of Mozambique, Rogério Manuel, pointed to Nigerian bank UBA as one of the next banks likely to fail.

The central bank said on Friday that the solvency ratios of the group of Mozambican banks cited on social networks bore little relation to reality and that the banking system maintained an average solvency ration of more than 14 percent.

“There is no reason for panic, because the banking system is stable, solid and in good health,” central bank administrator Joana Matsombe told a news conference aimed at countering rumours of further imminent bankruptcies.

Source: Lusa