BoN launches court bid to close SME bank

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WINDHOEK, 23 OCTOBER 2013 - Governor of the Bank of Namibia (BoN) Ipumbu Shiimi gestures during the monetary policy announcement on Wednesday. (Photo by: Pearl Coetzee) NAMPA

Kuzeeko Tjitemisa

Windhoek-The Bank of Namibia (BoN) has initiated proceedings in the High Court in an attempt to close down the SME Bank Ltd, BoN Governor Iipumbu Shiimi announced yesterday.

Shiimi’s statement did not elaborate on the details of court proceedings, saying on that “further information will be availed at the appropriate time.”

The announcement was met with mixed reactions by labour unions, with the country’s biggest umbrella union welcoming the move, while its affiliate union for the financial sector was highly critical of the announcement.

“The [SME] bank should be closed, finish and klaar,” was the reaction of the secretary general of the umbrella union National Union of Namibian Workers (NUNW), Job Muniaro Muniaro, when contacted for comment yesterday.

In contrast, the Namibia Financial Institutions Union (Nafinu) referred to the statement it issued on June 7 to the effect that the closure of SME Bank would “cause unnecessary discomfort, further unemployment and loss of state resources”.

“Unless there are new development in the court papers filed by the BoN today, our stance still stands,” an adamant Nafinu deputy general secretary Famuel Vries said. Nafinu has more than 200 members who are employed at SME Bank.

In his statement, Shiimi said the Bank of Namibia was “aware of the anxiety these actions may cause employees, depositors, creditors and other interested parties alike.” He then called for calm during this period of transition and urged all stakeholders to cooperate fully and exercise the necessary patience.

BoN invoked Section 56 of the Banking Institutions Act in March and assumed control of the SME Bank’s assets, liabilities and all its business affairs. This was after the central bank could not get satisfactory answers regarding the N$200 million of depositors’ money, which SME Bank invested with South African institutions.

BoN also relieved the SME Bank’s board of directors of their duties and sacked the top management, including chief executive officer Tawanda Mumvuma, along with the general manager for treasury and the finance manager. The central bank has since gone on record to say it regards much of that money “lost”, as there was no assurance that it could be recovered.

Two weeks ago, the South African Reserve Bank subpoenaed all South African banks and financial institutions that have transacted with SME Bank in Namibia to confirm what SME Bank funds are still on their books, if any.

New Era previously reported on the vast amounts deposited by SME Bank in South African institutions before the money was disinvested – without making any return on investments – and channelled to other institutions, apparently without any valid explanations. One institution had in fact flagged SME Bank transactions as “suspicious” and closed the accounts.

Muniaro said the NUNW welcomes the move to close down SME Bank, “since it has lost its purpose,” and blamed the current crisis at the bank on the way the institution had been run up to the point it was taken over by the central bank.

The SME Bank was meant to help small medium enterprises business, but ended up financing big and well established companies and others, “which in my view are not small companies”, Muniaro said.

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