THE Bank of Zambia (BoZ) has taken possession of three financial services companies for bankruptcy and failure to comply with the central bank’s directives.
The companies are Cetzam Financial Services Plc, Genesis Finance Limited and Commercial Leasing Zambia Limited.
According to the BoZ head of communications Kanguya Mayondi, an inspection instituted under the Banking and Financial Services Act (BFSA), chapter 387 of the laws of Zambia, showed that the financial service providers’ capital was less than the prescribed minimum or they were bankrupt.
BoZ said the financial service providers were ‘‘unable, or were likely to become unable’’, to continue their operations in the ordinary course of their business.
“The Bank of Zambia has determined that Cetzam financial services Plc, Genesis Finance Limited and Commercial Leasing Zambia Limited are capital insolvent,” he said.
BoZ stressed that shareholders had failed to recapitalize the institutions and could not propose a recapitalisation plan acceptable to the central bank or enter into an agreement with the BoZ.
He further said the board of directors for the institutions had been unable to resolve the deteriorating financial performance and condition of the institutions.
Mr Mayondi explained that this left the BoZ with no option but to exercise its authority under the law in order to safeguard the interests of the public and provide for their orderly exit from the financial system.
He explained that the central bank took over the three named institutions pursuant to Section 81 of the BFSA Act, chapter 387 of the laws of Zambia.
Mr Mayondi explained that BoZ was empowered under Section 81 of the BFSA to take possession of a financial service provider, where such an organization refused to comply with an order or directive of the bank.
“The three institutions are now under the possession of the Bank of Zambia. During this period; the Bank of Zambia shall cause to be prepared statements of affairs and take any other action it deems fit.
“All questions from depositors, creditors and other interested parties should be forwarded to director – Non Bank Financial Institution Supervision, BoZ,” he said.