The minimum share capital of banks operating in Mozambique will be raised from 70 million meticais (US$980,000) to 1.7 billion meticais (US$23.8 million), which is expected to happen within a maximum of three years, the governor of the Bank of Mozambique said on Monday.

Rogério Zandamela, who said he wanted the measure to strengthen the soundness of financial institutions operating in the country, also said that the banks’ minimum solvency ratio would go from 8.0% to 12.0%.

The solvency ratio is a financial indicator that reveals whether an enterprise is able to meet its short and long term liabilities.

In November 2016, even before rumors surfaced that there were banks with solvency ratios below the required 8.0%, the Bank of Mozambique determined the dissolution and liquidation of Nosso Banco, which had a “an unfeasible situation.”

In September, the central bank suspended Moza’s board of directors and executive committee, and is currently preparing the bank for sale, after shareholders failed to honour their commitment to capitalise the bank.

Source: macauhub