CENTRAL BANK INTERVENES IN MOZA BANCO

The Bank of Mozambique has intervened in the country’s fourth largest commercial bank, Moza Banco, suspending its Board of Directors, and imposing a provisional board.A statement issued by the central bank on Friday said the financial state of Moza Banco had been declining “in an unsustainable manner”. The Bank of Mozambique had stepped in “to protect the interests of the depositors and other creditors” and “to safeguard the normal operating conditions of the banking system”.

The statement assured the bank’s clients and the public at large that Moza Banco “will continue to function normally”.This is only the second time the Bank of Mozambique has intervened in a failing private bank. The first such event was the rescue of Austral Bank (later transformed into Barclays Bank-Mozambique) in 2001.The circumstances, however, could hardly have been more different. Austral collapsed under a huge weight of non-performing loans. Austral had resulted from the hasty privatisation of the People’s Development Bank (BPD) in 1997, and when the new owners, notably the Malaysian Southern Bank Berhard, were faced with a crisis, they simply handed their shares back to the state.Moza Banco, however, does not appear to have engaged in reckless lending. Instead it ran into a shortage of liquidity, and its shareholders were unable to recapitalize the Bank.This is a serious blow to the hopes of setting up a private bank controlled by Mozambicans. From the moment it was founded, Moza Banca insisted that it should be at least 51 per cent owned by Mozambicans. The Mozambican shareholder is Mocambique Capitais, which consists of about 400 Mozambican investors. The foreign investor was initially the Portuguese Banco Espirito Santo (BES). But BES in Portugal was seriously mismanaged, and in 2014 it had to be bailed out by the Portuguese central bank. Its healthy assets (including the 49 per cent holding in Moza Bank) were spun off into a new entity, Novo Banco. But it seems that Novo Banco was in no condition to inject new funds into Moza Banco. The founder and chairperson of Moza Banco was Prakash Ratilal, a former governor of the Mozambique. The man whom the central bank has put in charge is Joao Figueiredo, who once headed the country’s largest commercial bank, the Millennium-BIM, which he left to found one of the newest players on the Mozambican financial stage, Banco Unico.