Royal Bank
FounderJeffery Mzwimbi
HeadquartersHarare, Zimbabwe

Royal Bank was a local bank that was indigenously owned that was established in 2201 but was forced to close on two separate occasions after having failed to recapitalise and having faced a lot of financial constraints, inadequate capital, perpetual losses, poor asset quality, severe liquidity crunch, weak risk management and poor corporate governance practices.[1]

Operations, Underperformance and Closure

Royal Bank has faced a lot turbulent times since its inception as a financial institution. The bank has been closed on two separate occasions which is a very clear indication that they have not had it easy in the industry. Apart from the rest of the banking sector going through some challenges, Royal Bank seems to have faced far worse. The underperformance of the financial has also been blamed on the managements' misuse of depositors funds through awarding themselves hefty packages.[1] Royal Bank was initially placed under curatorship by the central bank in 2005 after it had been discovered that the bank was in an unstable financial position.[2] It was further alleged that the bank had been brought down to its knees by imprudent banking practices and a series of inside loans that were not above board and taking necessary precautionary measures. After police investigations on the matter, two of the bank's senior management namely, Jeffery Mzwimbi and Durajadi Simba were arrested. The bank was eventually closed in late 2005 at the height of economic meltdown in Zimbabwe. After having failed to meet the minimum capital requirements, the bank was closed by the central bank and went into hibernation for six years after which they re-entered the banking sector.[3] February 2011, Royal Bank managed to make a comeback into the banking sector after having been re-licensed by the central bank.[4]

Barely two years since after its reopening, the bank was said to be going through a rough patch as of 2012 such that they were seeking external funding to inject some money into the institution. As of 2012, the bank was said to have lured Chinese investors and were looking for funding from a Kenyan firm.[5] Just as was the case when the bank was initially closed in 2004, when it was eventually shut in 2012 it was widely believed that there had been serious abuse of depositors funds by the top management, a series of under performing insider loans and a cocktail of operational irregularities. Speaking on the closure of the bank, Reserve Bank of Zimbabwe senior division chief: Banking Licensing, Supervision and Surveillance Mr Norman Mataruka stated that

onsite investigations by the central bank had unearthed gross irregularities indicating the bank was beyond redemption. The surrender of the licence followed a Reserve Bank of Zimbabwe’s determination that Royal Bank was no longer in a safe and sound financial condition. the banks’ shareholders and directors as unrepentant, abusing funds in the same manner that saw the bank collapse in 2004.[6]

Although there circulating rumours at the time that the Kenyan deal would suffer the same fate as that of the Chinese, Jeffery Mzwimbi the chief executive officer was very optimistic that the deal would see the light of day.[5] When the reserve bank raised the minimum capital requirement for banks, Royal Bank failed to comply and was forced to surrender their operating license. Following the liquidation of the bank, the depositors were said to be getting a maximum of US$500 from the Deposit Protection Corporation (DPC). When the central bank proposed the liquidation of the bank's assets, the bank moved in by proposing to convert its licence to a Micro Finance one arguing that their chances of survival were higher in microfinance. At the time of its closure, the bank was placed under provisional liquidation which saw the auctioning of its assets by Hammer and Tongues. The events at Royal Bank were not isolated as other local banks such as Genesis, Investment Bank and Renaissance Merchant Bank remained under-capitalised.[7]

Listed Operational Deficiencies

  • Failure to meet Real Time Gross Settlement payments amounting to US$1,3 million
  • Royal Bank did not have a core banking IT system
  • Failure to meet minimum capital thresholds


  1. 1.0 1.1 Charles Laiton RBZ seeks Royal Bank closure, NewsDay, Published: April 30, 2013, Retrieved: January 12, 2015
  2. Shakeman Mugari Royal Bank bosses nabbed over fraud, The Standard, Published: April 22, 2005, Retrieved: January 12, 2015
  3. Royal Bank of Zimbabwe Reopens Six Years After Being Closed, Bulawayo 24News, Published: February 22, 2011, Retrieved: January 12, 2015
  4. Royal Bank reopens doors to banking public, NewsDay, Published: February 21, 2011, Retrieved: January 12, 2015
  5. 5.0 5.1 Royal Bank Still Courting Kenyan Suitors, The Financial Gazette, Published: July 19, 2012, Retrieved: January 12, 2015
  6. Royal Bank shuts down, The Herald, Published: July 27, 2012, Retrieved: January 12, 2015
  7. Rebecca Moyo Banks fail min requirements, The Zimbabwean, Published: July 22, 2012, Retrieved: January 12, 2015