BoN wants to shut down failing SME Bank
The Bank of Namibia announced yesterday that it had approached the High Court to seek the winding down of business at the embattled SME Bank.
Central bank governor Iipumbu Shiimi called for calm in anticipation of proceedings that will be heard in the High Court soon, saying it would be business as usual at the SME Bank, which is currently under its curatorship.
“While the Bank of Namibia is aware of the anxiety these actions may cause to employees, depositors, creditors and other interested parties alike, it nevertheless calls for calm during this period and urges all stakeholders to cooperate fully and exercise the necessary patience,” said Shiimi.
He did not wish to elaborate on the central bank's decision.
“Further information in this regard will be availed at the appropriate time,” said Shiimi briefly.
Winding down can be defined as the process of selling all the assets of a business, paying off its creditors, distributing any remaining assets to the partners or shareholders and then ultimately dissolving the business.
The Namibian this week reported that the Ministry of Finance set out to close the SME Bank after it had found that it did not fulfil its mandate.
“Treasury cannot bail out an institution that has irregularly invested shareholder capital outside Namibia, which now appears to have become irretrievable,” a summary of an internal assessment conducted by the finance ministry said.
The other conclusion was that the SME Bank was broke and was operating below the liquidity requirements as per the Banking Institutions Act and the licence requirements, a claim denied by minority shareholder Metropolitan Bank of Zimbabwe in a document seen by Namibian Sun recently.
The finance ministry also said the structure and management of the bank appeared not to be fit and proper to conduct the operations of a bank in a sustainable manner.
According to the ministry's assessment, the decision to close the bank was made when “the information about the illicit investment of N$200 million was confirmed”.
“Losses have to be curbed now instead of increasing them by providing further capital to an institution that has demonstrated its inability to responsibly fulfil its mandate,” the assessment said.
Finance minister Calle Schlettwein confirmed to The Namibian this week that there was a treasury assessment of the SME Bank, but declined to provide further details, saying discussions on the future of the bank were continuing.
He added that his general view on the matter was that the government cannot continue pumping money into institutions that continue to fail.
“Why should we pay for something that is continuously failing?” he asked.
The central bank placed the troubled lender under curatorship early this year following the investment of about N$200 million in questionable financial instruments.
“The Bank of Namibia has assumed control of the operations of the SME Bank to allow for an objective and thorough assessment of the investment portfolio of the SME Bank to make a full determination of the soundness of these investments.”
According to Shiimi, the answers given by the implicated persons were not satisfactory and resulted in their suspension, prompting the central bank to take swift action.
It is believed between N$181 million and N$196 million was invested in South Africa, some of which found an 'unsafe' haven at the Venda Bank Mutual Society, which is but one of the financial institutions implicated.
OGONE TLHAGE
Central bank governor Iipumbu Shiimi called for calm in anticipation of proceedings that will be heard in the High Court soon, saying it would be business as usual at the SME Bank, which is currently under its curatorship.
“While the Bank of Namibia is aware of the anxiety these actions may cause to employees, depositors, creditors and other interested parties alike, it nevertheless calls for calm during this period and urges all stakeholders to cooperate fully and exercise the necessary patience,” said Shiimi.
He did not wish to elaborate on the central bank's decision.
“Further information in this regard will be availed at the appropriate time,” said Shiimi briefly.
Winding down can be defined as the process of selling all the assets of a business, paying off its creditors, distributing any remaining assets to the partners or shareholders and then ultimately dissolving the business.
The Namibian this week reported that the Ministry of Finance set out to close the SME Bank after it had found that it did not fulfil its mandate.
“Treasury cannot bail out an institution that has irregularly invested shareholder capital outside Namibia, which now appears to have become irretrievable,” a summary of an internal assessment conducted by the finance ministry said.
The other conclusion was that the SME Bank was broke and was operating below the liquidity requirements as per the Banking Institutions Act and the licence requirements, a claim denied by minority shareholder Metropolitan Bank of Zimbabwe in a document seen by Namibian Sun recently.
The finance ministry also said the structure and management of the bank appeared not to be fit and proper to conduct the operations of a bank in a sustainable manner.
According to the ministry's assessment, the decision to close the bank was made when “the information about the illicit investment of N$200 million was confirmed”.
“Losses have to be curbed now instead of increasing them by providing further capital to an institution that has demonstrated its inability to responsibly fulfil its mandate,” the assessment said.
Finance minister Calle Schlettwein confirmed to The Namibian this week that there was a treasury assessment of the SME Bank, but declined to provide further details, saying discussions on the future of the bank were continuing.
He added that his general view on the matter was that the government cannot continue pumping money into institutions that continue to fail.
“Why should we pay for something that is continuously failing?” he asked.
The central bank placed the troubled lender under curatorship early this year following the investment of about N$200 million in questionable financial instruments.
“The Bank of Namibia has assumed control of the operations of the SME Bank to allow for an objective and thorough assessment of the investment portfolio of the SME Bank to make a full determination of the soundness of these investments.”
According to Shiimi, the answers given by the implicated persons were not satisfactory and resulted in their suspension, prompting the central bank to take swift action.
It is believed between N$181 million and N$196 million was invested in South Africa, some of which found an 'unsafe' haven at the Venda Bank Mutual Society, which is but one of the financial institutions implicated.
OGONE TLHAGE
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