THE Zimbabwe Allied Banking Group yesterday indicated that it had submitted its recapitalisation plan to the central bank after reaching an agreement with an international financial institution that will inject about US$30 million into the bank.

Sources within the bank said the plan submitted to the reserve bank indicates that ZABG is seeking to raise funding in two phases which include funds to meet capital requirements and securing US$100 million in lines of credit.

Sources say the bank's recapitalisation plan will run parallel with other initiatives and major shareholders could also come up with another proposal.

The deal is, however, still subject to approval by the central bank, Ministry of Finance and Ministry of Youth Development, Indigenisation and Empowerment.

If the deal goes through it means major shareholders would be heavily diluted. Government has a 92 percent stake in ZABG, which it controls through Allied Financial Services.

Reserve Bank Governor Dr Gideon Gono and Finance Minister Tendai Biti believe that shareholders needed to dilute their stake by inviting new shareholders who can inject fresh capital to save banks instead of clinging to their shareholding.

The Reserve Bank of Zimbabwe had given undercapitalised banks February 14, 2012 to finalise their recapitalisation plans or find credible suitors.

Commercial banks are compelled to have a minimum capital threshold of US$12,5 million while merchant banks should have US$10 million.

In a statement yesterday, ZABG said that it had submitted its plan in line with the call for banks to finalise recapitalisation initiatives.

Royal Bank, ZABG and Genesis were the three commercial banks yet to meet minimum capital thresholds.Meanwhile, Royal also issued a statement recently that it had submitted its revised plan to the RBZ.

Presenting the 2012 monetary policy statement earlier this month, Dr Gono said there would be no further extensions to the February 14 deadline.

This means that if the banks fail to meet the requirements or their plans are turned down, they will be forced to surrender their banking licences or merge operations.ZABG unbundled in 2010 from an amalgamation of Trust Bank, Royal and Barbican.

Barbican has failed to resume operations after it was re-issued with a licence in 2010. The bank's management is, however, confident of meeting the requirements after reaching an agreement with potential investors. China Development Bank, which has made major investments in Africa, has been linked with ZABG but bank officials refused to divulge the identity of the potential investors.

Kingdom Bank, which was on the list of undercapitalised banks, has since concluded a deal with AfrAsia Bank to invest US$9,5 million thereby meeting the minimum capital requirements.

The Mauritian financial institution will gain 35 percent in the bank.Renaissance Merchant Bank was last week taken over by the National Social Security Authority for a cash consideration of US$24 million which has helped the bank meet the RBZ's capital thresholds.

The bank's curatorship expires at the end of the month and it is likely to be lifted following the takeover by NSSA.