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Zimbabwe sets up ARC

The Reserve Bank of Zimbabwe has created a company that will buy non-performing debt from banks. The Zimbabwe Asset Management Corp will purchase the loans under commercial terms, and assign collateral and all other rights, the central bank said in its monetary policy statement. The company will seek to clean up and strengthen banks’ balance sheets and provide them with the liquidity to fund valuable projects for the economy to rebound and to mitigate loss of confidence, the central bank said. Non-performing loans at Zimbabwean banks swelled to 18.5% of total loans, or $705 million, in June from 1.6% in 2009. Zamco, as the company will be known, will finance the purchases through a combination of non-funded lines of credit, new inflows, long-term bonds and Treasury bills, the central bank said.

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