The Bank of Zambia BoZ has officially unveiled the opening of the Zambia Industrial Commercial Bank Limited – ZICB after restructuring of the former Intermarket Banking Corporation Zambia Limited which the Bank of Zambia took possession of on 29th November 2016 on account of the bank being insolvent and unable to meet its obligations as they fell due.
Speaking during the official launch Tuesday morning, Bank of Zambia – BOZ Governor Dr. Denny kalyalya said 23rd October 2018 has marked a historic moment in the operations of the bank because of the genesis of ZICB and the great efforts that went into the conception and birthing of the bank that is being officially launched. Dr. Kalyalya said with the support of the various stakeholders, the restructuring of IBC became the most practical and attractive resolution option available to the Bank at the time.
He told the gathering that after protracted discussions and negotiations, the Bank of Zambia managed to secure agreements with the majority of the large corporate depositors, these being National Pension Scheme Authority (NAPSA), the Madison Group and the Workers Compensation Fund Control Board to convert their deposit liabilities into equity while the majority opted to forego 40% of the value of their outstanding deposits through a haircut and to defer payment of the remaining 60% of their deposits until agreed dates after opening of the bank.
In additionally, to ensure solvency of IBC, the Industrial Development Corporation (IDC) came on board to participate in the process. All these were commendable efforts which contributed to the successful restructuring of IBC and culminated into the incorporation of a new bank, the ZICB.
“This is the first of this kind of restructuring of a bank that has been undertaken by the Bank of Zambia, and it is for this reason that we are delighted to witness the launch of the product of this spirited restructuring exercise, the ZICB,” he said.
“Previously, when banks failed on account of insolvency, only one model of rescue was available in the regulatory framework and that was by way of compulsory liquidation. Ordinarily, liquidation processes are very lengthy and protract over a number of years, ultimately ending up as a very costly resolution option.
In the absence of a deposit insurance system, the depositor claims have had to be met from the proceeds of disposal of assets of the closed bank, which is a very slow and lengthy process, as sometimes it involves court processes. Worse still, prospects of recovery are very slim in liquidation. ,” he added.
He further said the Banking and Financial Services Act (2017) has now been strengthened to provide for other more effective options of resolution, including the purchase and assumption and bridge bank arrangements.
And Finance Minister Margaret Mwanakatwe has called on the bank to partner with private sector in finding solutions to the challenges being faced by Small and Medium Scale Enterprises – SME.
Speaking during the same launch event, Mwanakatwe said government is aware of the challenges that local entrepreneurs face in accessing financing that is structured for the primary purpose of stimulating growth of the SMEs and local businesses.
Mwanakatwe further stated that access to finance for SMEs is limited due to the presence of structural constraints, including firm informality, high collateral requirements, and poor bank lending tools or products.
“These challenges of lack of affordable and long-term access to financing, among others, have been cited by the SMEs’ as the major reason for their low participation in the major economic activities of our country. As government, we want to see enhanced growth of local businesses,” she said.
ZICB has also unveiled its top management team and is being led by banker and former ZANACO Director of Treasury, Ignatious Mwanza.