TINASHE MAKICHI
The Zimbabwe Asset Management Corporation (Zamco) says it has collected more than half of the ZWL$1.18bn non-performing loans (NPLs) it assumed a few years ago as it moves to recover funds.
Zamco is a special purpose vehicle created by the Reserve Bank of Zimbabwe (RBZ) to take over NPLs from the balance sheet of banks to be able to lend again.
This comes amid fears that the default rate would result in banks cutting back on lending to the sectors of the economy.
“Total collections at the end of November of 2020 were ZWL$760m. This means as at that date we were left with a loan of ZWL$420m out of the acquired $1.18bn loans, Zamco CEO Cosmas Kanhai told Business Times this week.
As part of efforts to maximise on collections, Zamco has resorted to debt-asset swap mechanisms.
Zamco implemented the debt-swap system after facing challenges with some borrowers who have been delaying the process when dragged to courts.
The takeover of bad loans is also in line with international trends which saw the creation of 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 and AMCON of Nigeria to resolve the NPLs challenge.
Zamco was created by the RBZ in 2014 to deal with the problem of growing NPLs in the financial services sector. Since inception, Zamco has been assuming mortgage bonds, non-insider loans and NPLs for companies in good stead.
When Zamco was formed, the NPLs ratio had peaked to 22.14% in September2014.
The ratio has been reduced to 5%.
Notwithstanding the turbulent environment, Zamco managed to implement various strategies that maximised recovery from means other than loan repayments such as debt asset swaps.
Analysts say the recoveries to-date demonstrates that Zamco was not formed to simply acquire and warehouse or write-off NPLs as all amounts acquired remain due and payable.
Zamco has powers to acquire, reschedule, dispose of, hold, manage or otherwise settle NPLs of banking institutions.
In June2017, Zamco took control of 58.34% shareholding in troubled starafricacorporation from various banks and converted the debts into preference equity.
Now, Zamco is planning to offload the starafricacorporation stake. ffffff
