Bank of Mozambique governor says he had seconds to decide whether to save or liquidate Moza Banco

Speaking to journalists after the Monetary Policy Committee (CPMO) meeting in Maputo, and reflecting on his almost ten years at the helm of the central bank, with his second and final term ending in September, Zandamela described the interventions in Nosso Banco and Moza Banco, both in 2016, as the most difficult decisions of his tenure. “They were the two major interventions I had to make. They were difficult and, in some cases, they remain problematic to this day,” he said.

Zandamela recalled that he had returned to Mozambique after more than three decades at the International Monetary Fund (IMF) when he was confronted with severe problems at both banks. “They were not easy decisions. I barely knew the country.

I had just arrived and, a month later, very difficult decisions landed on my desk, and what had to be done had to be done,” he said. Referring to Moza Banco, then 49%-owned by Portugal’s Novo Banco, the successor to Banco Espírito Santo (BES), Zandamela described an emergency that required an immediate decision involving a systemically important bank. “I had less than one or two minutes to make that decision.

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Save it or liquidate it. It was literally a matter of seconds,” he said, acknowledging that the institution, now regarded as one of the country’s near-systemic banks, was already insolvent. “The bank was already dead, to tell the truth.

It had negative equity, which meant that, in reality, it no longer existed,” Zandamela said, explaining that, under the rules in force at the time, the appropriate course of action would have been to close the bank. Instead, he opted for an extraordinary intervention because of the systemic risks associated with liquidation. “I won’t hide it.

It was a personal decision because, under the rules and regulations, we had neither rules nor regulations to deal with such a difficult situation,” he said. “Strictly speaking, under the rules, my decision was relatively simple: order the bank to close immediately. Liquidate it, sell the assets and distribute whatever remained.” However, he said, liquidation would have had far-reaching consequences for Mozambique’s financial system and the wider economy. “It would have had seismic consequences for our financial system and our economy.

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