Public policy analyst sees short term economic impacts on Investrust Bank collapse

Michelle Morel, a Public policy analyst says the takeover of Investrust Bank PLC by the Central Bank may have some potential impacts which would include financial stability and job losses.

Others, she said would be loss of investor confidence, bailout costs, regulatory changes and market disruptions.

However, Morel said in a statement on Tuesday that given that Investrust was a relatively small player in the market, the overall economic impact of the takeover was likely to be minimal.

“While there may be some short-term disruptions and adjustments in the financial markets, the repossession is expected to have limited adverse effects on the overall economy,” he said.

Morel, who is Chief Executive Officer of the Institute of Research and Analysis (TIRA) said the Central Bank’s intervention should be aimed at stabilizing the financial sector and preventing a systemic crisis, which could ultimately contribute to maintaining financial stability in the long run.

Zambia Monitor reported the Bank of Zambia had repossessed Investrust Bank PLC on April 2 due to insolvency.

Investrust which traded on the Lusaka Securities Exchange (LuSE ) under the ticker symbol “INVE,” is currently the 19th most valuable stock on the LuSE with a market capitalization of K204 million, making up about only 0.206 percent of the LuSE equity market.

Investrust was said to have faced numerous challenges in achieving profitability and had undergone significant shareholding changes in an effort to remedy its poor performance.

In March 2021, West Indian Bank purchased a 24 percent stake in Investrust Bank, following ZCCM-IH becoming the majority shareholder in May 2018.

Investrust also failed to meet the BoZ’s K104 million capital requirement in May 2018.

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