Mozambique’s Social Security recapitalised ‘O Nosso Banco’ but never received dividends, says Government

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Mozambique’s Social Security recapitalised ‘O Nosso Banco’ but never received dividends, says Government

11:43 CAT | 25 Nov 2016

AIM (File photo) / Minister of Labour, Employment and Social Security of Mozambique, Vitória Diogo

The Minister of Labour, Employment and Social Security, Vitória Diogo, said yesterday that the National Social Security Institute (INSS) had recapitalised the liquidated O Nosso Banco bank twice, but never received any dividend. Minister Diogo also confirmed that the INSS was a depositor in the institution.

Diogo said that INSS, which manages Mozambican workers’ pensions, injected more than 131 million meticais in 2006 in return for 66.03 percent of the shares, and a further 313 million meticais in 2014, increasing its share to the current 77. 2 percent.

“It should be noted that from 2001 to 2016, the INSS never received any dividends from the liquidated Nosso Banco,” said Vitória Diogo, who was speaking in the Assembly of the Republic about the INSS participation in O Nosso Banco, which it joined in 2001 as founder and majority shareholder with 25 percent.

In addition to having held capital as a majority shareholder, the INSS had a Nosso Banco term deposit of 2.7 billion meticais, equivalent to 20.3 percent of its portfolio of term deposits in Mozambican banks .

The Minister of Labour said that the Board of Directors of INSS communicated on October 24 to the General Assembly of O Nosso Banco and on the 28th of the same month to the Bank of Mozambique that it intended to reduce its participation in the institution, within the scope of its strategy to reduce its holdings in companies with weak or no profitability.

“Following this strategy, the INSS adopted an approach of reducing its exposure in the now-defunct O Nosso Banco, mainly due to the fact that it brought no returns, as well as in recognition that bank management was not the mandate or the main vocation of the INSS”, said the Minister.

Vitória Diogo explained that the INSS entered O Nosso Banco as part of its policy of capitalising the pension and allowance reserve fund and strengthening the sustainability of the social security system.

The Minister also said that Mozambican Social Security has the capacity to fulfil its obligations in pensions and subsidies to the beneficiaries of the system.

“We can assure the public that the INSS will continue to pay pensions and allowances on time,” she said.

According to the Minister of Economy and Finance, Adriano Maleiane, in addition to the INSS, O Nosso Banco had as shareholders public companies Electricidade de Moçambique [EDM], with 22 percent, SPI, a company associated with the ruling Liberation Front of Mozambique (Frelimo) political party, with 4 percent, along with Alfredo Kalisa, a Rwandan investor, with 1.9 percent, and a company constituted by 12 small investors, including figures of the ruling party, with 1.57 percent,

On November 11, the Bank of Mozambique announced the liquidation of O Nosso Banco, citing the continuing deterioration of the bank’s main prudential and profitability indicators, negative equity, capital well below the minimum regulatory threshold and weak liquidity.

The bank had repeatedly failed to comply with mandatory reserve levels, had negative cumulative results and was unable to increase its capital.

Source: Lusa