No foreign currency could be availed but rather Royal Bank was exempted from paying statutory reserves for one year, thus releasing capital which Royal could utilize to acquire foreign currency and buy the needed resources. This is a normal procedure and practice of the Central Bank, which had been made accessible to other banking institutions too. This would also improve the bank’s liquidity position.
Even investors are occasionally offered tax exemptions to promote and encourage investments in any industry. This exemption was delayed as a result of bungling from double glazing london the Banking Supervision and Surveillance Department of the RBZ and was thus merely implemented a year later, consequently it would run from May 2003 until May 2004. The early cancellation of the exemption captured Royal Bank by surprise because its cash flow projections had been predicated on these commencing in May 2004.
Whenever the RBZ insisted, Royal Bank calculated that the statutory reserves and noted that, because of a decrease in its deposits, it wasn’t qualified for the payment of statutory reservations at that moment. When the bank submitted its returns with zero statutory reserves, the Central Bank maintained that the bank was currently due for the entire statutory publication because inception. In effect this was not being handled as a statutory reserve exemption but more as a penalty for evading statutory reservations. Royal Bank appealed. There were conflicting opinions involving the Bank Supervision and Capital Markets divisions on the problem as Bank Supervision surrendered into the validity of Royal’s position. However Capital Markets insisted it had instructions from the very best to recall the complete amount of $23 billion. This was driven on Royal Bank and transferred without permission to the Troubled Banks Fund at exorbitant prices of 450% p. a.
When FML was demutualising, the executives were worried about the possibility of being swallowed by its own enormous strategic partner, Trust Holdings. FML approached Royal Bank and other banks to function as buffers. The arrangement was that FML would fund the deal by putting funds with Royal Bank so that Royal would not finance it from its balance sheet.