The fate of Investrust Bank, legacy case standing out for BOZ to moderate as future template!

By: Kelvin Chisanga

Interesting stuff flying around to read about the possession of the Investrust Bank by the Bank of Zambia, as officially indicated this entire process by the Bank of Zambia, 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.

It’s really sad to see Zambian origin local Bank faces this ordeal situation at the centre of advancing local participations as far as local content policy is concerned. However, the case of investrust bank comes in, with much sadness of which by extension from the look of things it is clearly foreseen that a liquidation process may soon start kicking 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.

The eventual closure of Investrust bank is first of all a very sad situation to the banking society, as this will create a bad cascading effects creating a bad perception about uptake aspects of financial solutions, 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 considering strongly on hoarding money right at homes with a considerable fractions.

Secondly, the impact will be felt on those business activities that relied mostly on this bank for their daily activities as cheque accounts cannot ultimately function to support day-today business activities. And more so, the households on pensions, salaries, government bills payments, supplier receivables and payables will greatly be affected.

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

Investrust Bank has 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 such as 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.
I think the issue could be deeper than the surface view can show, the issue of changes in shareholders’ interest was seen as a clear indicator from the onset especially with the sharp changes that came with ZCCM-IH at one point, 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 and on the other hand, 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.

Lastly, its an important element to note that Bank of Zambia in the recent past has been working on this model and I think many legacy matters have been built up for strong case to use and moderate effects, as a futuristic operational model to work with, in helping out of the financial and banking sector so that primary objective should be foster local participations with market confidence.