INVESTRUST TAKEOVER WILL HAVE RIPPLE EFFECTS – ECONOMIST

 By Arnel Chitundu

THE takeover of Investrust Bank PLC, by the Central Bank, after declaring it insolvent, will see a local bank face an ordeal at the centre of advancing local participation as far as local content policy is concerned, Economist Kelvin Chisanga has said.

Mr. Chisanga expressed sadness  over the takeover of the bank, stating that it was  clearly foreseen that a liquidation process may soon start kicking in,  especially after a due process of assessment takes place in order to meet up with some claims that may arise from both investing and consumer interests.

He said the eventual closure of Investrust bank was a sad situation to the banking society, as it will create a bad cascading effect, creating a bad perception about uptake aspects of financial solutions.

He added that as the country champions on the aspirations of improving financial inclusions and by large extensions, the consumers will have strong doubts about keeping monies in a bank and strongly consider hoarding money right at homes with a considerable fractions.

Mr. Chisanga stated that the impact of taking over the bank will be felt on those business activities that relied mostly on the bank for their daily activities, as cheque accounts cannot ultimately function to support day-to-today business activities.

He added that the households on pensions, salaries, government bills payments, supplier receivables and payables will also be greatly affected.

He disclosed that the central bank had set the tone to state that it will have to undertake some typical methodical assessment into Investrust Bank’s assets where an appropriate measure of action will rightly be taken into considerations and the official communication will be made open to all.

He emphasized that there are many standing effects seen in this matter as the capital formation for driving enterprise development gets pretty much affected during this process.

He explained that Investrust Bank had been an interesting banking asset where it had an instinct to have started as a local promising banking outfit which prompted many things on Zambia’s business landscape.

He said the bank saw the opening of Lusaka Securities Exchange being one of the founder members and one of the first banks to be listed on the stock market.

“The issue of changes in shareholders’ interest was seen as a clear indicator from the onset, failing to meet with obligations as a bank could be a factor that can be seen from two angles, as one strong element is the need for capital aspect where BOZ has also been unstable in the policy shift around reserve ratio,” Mr. Chisanga said.

He added that Investrust Bank had something to question around financial statements which was never produced despite being both requirements for a listed company on the LuSE and as a strong BOZ regulatory element.

He said it was important to note that the Bank of Zambia in the recent past had been working on this model and many legacy matters have been built up for strong case to use and moderate effects, as a futuristic operational model to work with.

He said in helping out of the financial and banking sector the primary objective should be foster local participation with market confidence.

The Central Bank of Zambia announced its takeover of Investrust Bank PLC, after declaring it insolvent.