GOVERNMENT has instructed its insurer to compensate holders of nostro accounts in closed banks in either US dollars or the equivalent in local currency, it was revealed.
Currently, the Deposit Protection Corporation (DPC) is overseeing the liquidation of six banks, namely, Genesis Bank, Royal Bank, Trust Bank, Interfin Bank, Allied Bank, and AfrAsia Bank who collectively had outstanding claims totaling $14,48 million as at the end of December 31, 2018.
“What happened when there was that conversion on the 22 February 2018, all liabilities became RTGS and, therefore, it means we are settling those claims in the correct currency in terms of the Statutory Instrument (33 of 2019). We are aware that there were still accounts which were nostro accounts that were remunerated in US dollars,” said DPC chairman Agmos Moyo at the institution’s annual general meeting (AGM) yesterday.
“We did approach the Reserve Bank and the shareholder (government) as to whether we should have a separate cover for the nostro accounts, but the current policy directive is that they be quarantined and, therefore, they are not covered, the current nostro accounts as per directive from the Ministry of Finance.”
On February 22, government officially adopted the local currency in the form of RTGS dollars at a devalued rate of US$1:RTGS$2,50. This was later followed by the reintroduction of the Zimbabwe dollar last month as the sole legal tender at a rate of US$1:ZWL$6,47.
But, since last month, the Zimbabwe dollar has continued to lose value due to inadequate forex and market confidence to an extent that it is now trading at US$1:ZWL$9,16.
As such, depositors who had monies in US dollars or the equivalent value when the aforementioned banks were liquidated, will receive monies at less the value they held in their bank accounts. Most of the banks that were liquidated happened post dollarisation in 2009.
“You need to understand that we have two separate roles. One, in terms of compensating depositors from the fund itself. This is where we are paying ZW$1 000 per depositor per institution and then the second aspect of it is through liquidation where you are paid on a pro-rata basis depending on the assets that have been recovered,” DPC chief executive officer Vusi Vuma told NewsDay Business after the AGM
“So, in terms of the value it can be 100% if say for instance, you had ZW$1 000 in your account that means you are fully covered, but in excess of ZW$1 000 then you will recover the excess through the liquidation process. We all take policy from the Ministry of Finance, so if they have said the value is now one as to whatever the rate then we just have to compensate in terms of that prescribed rate.”
He added that the Finance ministry was working on the modalities on how to compensate those who were holding US dollars in their nostro accounts at the time of liquidation.