Four troubled Zimbabwean banks are set to merge with stronger partners as part of efforts to restore confidence in the financial sector, the central bank said on Saturday.
Zimbabwe's financial sector has been shaken by the Reserve Bank's crackdown on speculative activities and the tightening of rules which have exposed liquidity problems, managerial shortcomings and structural ownership weaknesses.
The sector - which had weathered a crisis sweeping the southern African country - has been targeted for fuelling inflation through its participation in the foreign currency black market, as well as engaging in non-banking activities.
Giving an update on the crisis, Reserve Bank governor Gideon Gono said steps were being taken to merge with suitable partners four of six banks, which had received rescue packages under the Troubled Banks Fund.
The central bank has disbursed about 400 billion Zimbabwe dollars ($95.01 million) under the fund and Gono said the four - Trust Bank, Metropolitan Bank, Royal Bank and Century Bank - would continue to receive support from the bank.
"A memorandum of understanding has been prepared to facilitate the merger of the operations of Trust Bank and a number of suitors," Gono said in a statement.
"We remain resolute about our objectives to see proper banking taking place in this country," he added.
Speculation is rife that insurance giant Old Mutual through its South African banking subsidiary Nedcor is close to concluding a deal with Trust. The parties have declined to comment.
Market watchers reckon Century Bank is likely to merge with CFX Financial Services, a Harare-based merchant bank.
Gono said Metropolitan Bank had approached potential investors to take up equity in the group, while Royal Bank was in talks which could see it merge with "one or two banks in the market". In the last two weeks, the Reserve Bank has placed five black-owned institutions under curatorship.
Banking sector mismanagement, largely confined to black-owned or so-called indigenous banks, is one of several problems plaguing Zimbabwe as it battles its worst economic crisis since independence in 1980.
Its economy has shrunk 30 percent in real terms in the last five years and inflation has soared to above 600 percent, one of the highest rates in the world.
The country's woes have been blamed by critics on President Robert Mugabe's policies - particularly the seizure of white farms for redistribution to landless blacks.
Mugabe denies mismanaging the country and accuses his local and foreign opponents of sabotaging the economy. The indigenous banks were formed in the 1990s, when the government liberalised the sector.
Gono said the country's remaining 31 financial institutions had adjusted to the new order and that the central bank would remain unwavering in its efforts to strengthen the banking sector.
"The rest of the financial sector consists of 10 commercial banks, six merchant banks, four building societies, six discount houses, five finance houses, who are in a sound and stable condition," he said.
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