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Zimbabwe increases bank capital threshold

Zimbabwe’s central bank Wednesday increased the capital requirement for banks by 900 percent, citing the need to create a strong and healthy banking sector.

Central Bank Governor Gideon Gono said the capital requirement for commercial and merchant banks would go up from US$12.5 million to US$100 million, that of building societies from US$10 million to US$80 million and finance and discount houses from US$7.5 million to US$60 million.

The banks were given until 2014 to meet the new capital requirements, but must be 75 percent compliant by by the end of next year.

Gono said the move was meant to help create strong and healthy banks able to withstand competition and survive economic and other shocks.

Zimbabwe’s banking industry has been shaky for years, with several banks closed by regulators owing to under-capitalisation. The latest was shut down last week.

“The increase in minimum capital levels for banking institutions has been necessitated by the dynamic nature of the financial landscape, regulatory requirements, increase in competition and economic uncertainties which has placed an unprecedented pressure on banks to be adequately capitalised,” Gono said.

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