PM defends Mozambique’s reform of the financial system

25 November 2016

The liquidation of Mozambican bank Nosso Banco requires a legislative reform of the financial system to ensure greater protection of depositors in the event of financial difficulties of credit institutions, the Mozambican Prime Minister said on Thursday in Maputo.

Carlos Agostinho do Rosário, answering questions from MPs in parliament during the debate on Nosso Banco, pointed out that current legislation does not allow the Bank of Mozambique to use the Deposit Guarantee Fund as a bank resolution instrument, to facilitate mergers between more solid banks and those with financial difficulties.

At the end of his speech, the Prime Minister described the liquidation of Nosso Banco as an exception, saying that “the financial system remains generally stable and reliable and Mozambican banks remain a safe place to save money.”

The Bank of Mozambique announced on 11 November the liquidation of Nosso Banco, held by the National Institute of Social Security, and part-owned by power company EdM and SPI, the business arm of the Mozambique Liberation Front (ruling party Frelimo).

The central bank said at the time that the liquidation of Nosso Banco was determined by the continuing deterioration of the main prudential and profitability indicators, negative equity, and capital far below the regulatory minimum and weak liquidity. (macauhub)