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HARARE, Oct 19 (Reuters) - Zimbabwe plans to capshareholdings in banks in a bid to improve stability followingseveral bank failures in the last five years, but foreign bankswould be allowed to control their local units, according to abill before parliament.
Five local banks have shut in the last two years due toliquidity and solvency problems and were viewed by some in thelocal sector as applying less stringent rules on lendingcompared with big foreign-owned banks.
The Banking Amendment Bill proposes to limit individualshareholdings in a bank at 5 percent and that of non-bankingcompanies at 25 percent. Before passing those limits, a companyor individual would have to justify to the Registrar of Banks itis in interest of the public and the bank.
Foreign financial institutions such as Standard CharteredPlc and Barclays Plc, and South Africa'sStandard Bank and Nedbank, which all haveoperations in Zimbabwe, would be allowed to control their localunits.
Under the proposed law changes, individuals convicted ofoffences relating to money laundering or terrorist financingcould not become directors of a bank's board.
No individual would be allowed to continuously serve asnon-executive directors of a bank for more than 10 years, whileall directors will be liable for debts accrued by a failed bank,unless they can prove their innocence.
"If they act recklessly or negligently or fraudulently theRegistrar and the Deposit Protection Corporation may take legalaction against them on behalf of depositors and creditors whohave suffered loss," the bill said.
A state-owned asset management company had by the end ofJune taken on nearly $100 million in bad loans from banks tohelp restore viability in the financial sector. (Reporting by MacDonald Dzirutwe; Editing by David Holmes)
