The Zimbabwe Asset Management Corporation (Zamco) collected about ZWL$103 million during the eight months to August of 2019 as the debt recovery firm looks at recovering all non-performing loans by 2025.
This collection by Zamco brings the total collections to $355 million since the commencement of the resolution in April 2017. This comes after Zamco had acquired NPLs amounting to ZWL$1.1 billion. Zamco is a special purpose vehicle established by the central bank to hive of NPLs from the balance sheets of banks to be able to lend. This came after 20.45 cents of each dollar borrowed was never returned amid fears banks would cut back on lending.
According to the NPLs resolution report seen by Business Times, Zamco will, during the debt recovery period, use various methods to resolve and collect funds from the borrowers.
“During the eight months to August 2019 collections totalling ZWL$103 million have been received both in cash and kind to bring the total collections since commencement of the resolution in April 2017 to ZWL$355 million,” Zamco said. This translates to a recovery rate of 31 percent. The firm said the pace of resolution to date is above the corporation’s set targets and is also in line with international trends for resolving NPLs through asset management companies such as Great Wall, Orient, Cinda of China, KAMCO of Korea, IBRA of Indonesia, Danarharta of Malaysia, SAREB of Spain and BAMC of Slovenia.
Since inception, Zamco has been assuming mortgage bonds, non-insider loans and NPLs for companies in good stead.
Zamco chief executive Cosmas Kanhai recently dismissed the notion in the market that the company was formed to cushion debts which could have been mainly accumulated by politicians. This comes after there had been reports that politicians were abusing the Zamco facility to clear their debts or loans.
He said Zamco was formed to save banks which were almost chocking because of the rising NPLs and the banks were the biggest beneficiaries of the formation of the SPV. In a recent interview, Kanhai told Business Times that on the NPLs mix politicians are not much because what “we assumed are business loans and not individual loans in most cases”.
“Zamco was not formed to cushion borrowers but to protect banks from closing and the best idea then was to come up with an SPV. Borrowers did not benefit from the state funds but banks actually benefitted the most,” he said recently.
“As ZAMCO I believe we achieved our objective to protect banks from closing and the general objective was on taking over loans and not looking at who is behind the loan,” Kanhai told Business Times recently.”
Banks have become stricter on lending to avoid the recurrence of a rise in NPLs. As at June 30, the NPL ratio was 3.95 percent down from 6.92 percent as at December 31 2018.