Reserve Bank of Zimbabwe
THE Zimbabwe Asset Management Company says less than 50 percent of the current outstanding non-performing loans of US$375 million are eligible for acquisition.
Zamco chief executive officer Cosmas Kanhai said ZAMCO will be targeting loans secured by mortgage bonds which constitute about 40 percent of the total NPLs.
“The reported level of non-performing loans outstanding as at 30 June 2016 amounted to about US$375 million. This level signifies a marked reduction from the peak non performing level of US$815,90 million (NPL ratio 20,45 percent) as at 30 September 2014. Almost 40 percent of these non-performing loans are secured by mortgage bonds meaning they are eligible for acquisition,” he said .
Zimbabwean banks have been battling NPLs owing to the harsh economic environment which necessitated the formation of ZAMCO in 2014. ZAMCO has managed to reduce Banking sector NPLs to 10,05 percent as at 30 June 2015 from 20,14 percent as at 30 September 2014 through the acquisition of NPLs worth US$498 million.
Meanwhile Kanhai said Zamco is set to conclude its second phase of NPls acquisition by end of December 2016 after which resolution methods which includes selling to investors in distressed assets is going to be considered.
“ZAMCO concluded the acquisition of the first phase of NPL acquisitions which focused on NPLs in the top 100 across the entire banking sector in December 2015. Beginning in January 2016 ZAMCO has been in the second acquisition phase focusing on NPLs outside the top 100.
“Other resolution methods would commence once ZAMCO has completed the acquisition process. ZAMCO expects to complete the acquisition process by the end of December 2016. Thereafter ZAMCO would then move onto the resolution stage which is the final stage for asset management companies formed to address non-performing loans,” he said
Kanhai said in these first two phases of NPL acquisition focus has been on NPLs whose underlying companies (borrowers) have prospects for turnaround if the loan is restructured.
In this second phase Zamco is also currently evaluating non-performing loans offered by banks.
ZAMCO uses a number of NPL resolution strategies namely plain loan restructuring, debt to equity conversion, debt asset swaps, selling to investors in distressed assets and foreclosures and this stage will take the bulk of its lifespan. FinX
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