The Bank of Mozambique on Friday ordered the dissolution and liquidation of one of the country’s smaller commercial banks, O Nosso Banco (Our Bank).
A statement from the central bank said that the financial position of O Nosso Banco had shown a continual decline in its main prudential and profitability indicators. It was poorly capitalised, had an “unsustainable economic and financial structure” and was suffering from “serious liquidity and management problems”.
O Nosso Banco had presented the central bank with a restructuring plan in 2014, which included recapitalisation and altering its administration and management structure. But O Nosso Banco did not comply with this plan, and “showed that it was unable to emerge from its difficult economic and financial situation”. It had thus become “non-viable”.
By failing to implement its own recovery plans “not only did it violate decisions of the central bank, but it also failed to re-establish balance to its financial situation”, said the statement.
The interests of both the bank’s depositors and its creditors were at risk, and so the Bank of Mozambique has cancelled its licence to operate, which implies that O Nosso Banco must now be dissolved and liquidated.
The Deposit Guarantee Fund, set up in 2010, and operated by the central bank will ensure that individual (but not corporate) clients of O Nosso Banco can retrieve at least some of their money.
O Nosso Banco was set up in 1999 under the name Banco Mercantil e de Investmentos (Merchant and Investment Bank – BMI), and changed its name to O Nosso Banco in 2015. It is a small bank, which only has branches in Maputo and employs about 70 staff.
Although it is a private bank, its main shareholders are public institutions. The National Social Security Institute (INSS) owns 77.2 per cent of the shares, and the public electricity company, EDM owns 16.13 per cent.
The holding company of the ruling Frelimo Party, SPI, owns 4.09 per cent, and the Rwandan businessman Alfred Kalisa, one of the bank’s founders and its first chairperson, owns 2.14 per cent.
This is the second Mozambican bank to fail this year. On 30 September the Bank of Mozambique intervened in the country’s fifth largest commercial bank, Moza Banco, suspending its board of directors, and imposing a provisional board. Moza Banco had run into problems of liquidity, and its shareholders were unable or unwilling to recapitalize the bank.
But clearly O Nosso Banco was in a much worse position. The central bank allowed Moza Banco to continue to trade, and there was no question of liquidating it. Instead MozaBanco will be sold off to new owners.