RECAPITALISE MOZA BANCO

The shareholders of Moza Banco, Mozambique’s fourth largest commercial bank, but which has been run by a provisional board of directors appointed by the central bank since last September, decided on Monday to recapitalize the bank.According to a press statement from the bank, recapitalization was the sole point on the agenda of the general meeting of shareholders. The shareholders approved an increase in capital of 8.17 billion meticais (about 117 million US dollars, at current exchange rates).
The Bank of Mozambique intervened on 30 September because Moza Banco’s financial situation was becoming unsustainable. According to the director of banking supervision of the central bank, Joana Matsombe, Moza Banco’s solvency ratio had gone negative. Although banks must not allow their solvency ratio to fall below eight per cent, in Moza Banco’s case the ratio was less than zero. “For this reason, the financial situation of the bank had deteriorated, and it was incapable of meeting its obligations”, Matsombe said. “When this happens, in any financial institution, the central bank has to intervene”.Moza Banco continued to trade normally, but the central bank had to guarantee this by injecting about eight billion meticais. Not only did Moza Banco continue to meet its obligations to clients and creditors, but over the past three months it has opened several new branches. Moza Banco is the only commercial bank where Mozambicans hold a majority of shares. The Mozambican shareholder, with 51 pr cent, is Mocambique Capitais, which consists of about 400 Mozambican investors.The foreign investor was initially the Espirito Santo Bank (BES) of Portugal. But after BES came near collapse in 2014, and had to be bailed out by the Portuguese central bank, its healthy assets (including the 49 per cent holding in Moza Banco) were spun off into a new entity, Novo Banco. But it seems that in 2016 Novo Banco was unable or unwilling to inject new funds into Moza Banco.That now appears to have changed, and the general meeting of shareholders on Monday insisted that they are willing to recapitalize the bank. This follows an independent diagnosis and review of the bank’s financial statements that was delivered to the shareholders on 23 December. The Bank of Mozambique had warned that, if the shareholders were unable or unwilling to recapitalize Moza Banco, then it would have to be sold off. Its network of around 120 branches and its modern facilities would certainly have made it an attractive purchase for other banks operating in Mozambique.The capital increase announced by the shareholders is almost the same as the amount which the Bank of Mozambique injected to keep Moza Banco running, and that eight billion meticais will have to be returned to the central bank.