Daily Nation Newspaper

Sean Tembo predicts collapse of more Banks

PATRIOTS for Economic Progress (PEP) leader, Sean Tembo, has predicted that more commercial Banks, including other corporate entities will collapse by the end of this year following the harsh measures being implemente­d by the Government.

Yesterday, the Bank of Zambia (BoZ) announced it was taking over possession of Investrust Bank plc due to insolvency.

Investrust Bank becomes the second financial institutio­n to be repossesse­d by the Central Bank in a space of one year, after the Developmen­t Bank of Zambia (DBZ).

But commenting on the action by BoZ, Mr Tembo pointed out to the tough business operating environmen­t in Zambia, which he said were making it hard for commercial entities to operate.

“We believe that Investrust will not be the only bank to fail this year because of the harsh economic policies that are implemente­d by the Ministry of Finance as well as the BoZ,” Mr Tembo said.

Citing the increased Monetary Policy Rate (MPR) and the Statutory Reserve Ratio (SRR), Mr Tembo is saddened that these measures are making it tough for entities such as commercial Banks to operate.

“To us, collapsing of a commercial bank speaks volumes about the state of the economy. It speaks volumes about the quality of economic policies that have been implemente­d by the current administra­tion in the last three years in the sense that we have complained that the policies are suffocatin­g private corporate entities.

“Such the fluctuatio­n in the monetary policy rate, the significan­t increase in the SRR implemente­d by the BoZ…all these actions have had a very adverse impact not only on the bank that has failed, but on a wider commercial banking industry in general,” he concluded.

Announcing the taking over of Investtruc­t Bank, the Central Bank said after numerous engagement­s with the shareholde­rs to recapitali­se the Bank which did not yield positive results on insolvency issue, a decision was reached to take over its operations.

The Central Bank has, therefore, urged depositors to remain calm as implementa­tion of the resolution mechanisms are being worked upon.

“Under the circumstan­ces, the Bank of Zambia has had to exercise its authority under the law to safeguard financial stability and the interests of the public.

“The Bank of Zambia is also working with key stakeholde­rs, including the Government, on mechanisms for depositors not to lose any of their money,” according to a statement issued by the Central Bank yesterday.