The Monrovia Banking Corporation (ROVIABANK)-in-reorganization, a local bank currently undertaking a reorganization initiative, has commenced payments to its depositors last week.

Making the disclosure at a press briefing last Friday in Monrovia, the acting Chairman of the Board of Directors of the ROVIABANK, Mr. Rudolph Merab said the voluntary exercise is a key component of a robust action plan that is being implemented by the shareholders of the bank, in collaboration with the Central Bank of Liberia (CBL), to reopen the institution for normal operations.

One of the problems occasioned by the Liberian civil war is the massive failure of financial institutions, which has caused many to lose their savings and eroded the confidence in the local financial markets. Between 1990 and 2003, 13 commercial banks seized to operate in the country.

Some observers do not expect many of these banks to reopen due to the banks’ poor financial conditions. Currently, only four banks are operating in Liberia. Among the reasons advanced by financial experts for these failures, are the under capitalization of banks, poor quality of loan portfolios, high-risk investment climate, and the fluctuations in the Liberian currency.

Mr. Merab divulged that about US$5 million will be paid to depositors so as to honor the bank’s commitment to its creditors and contribute to the rebuilding of confidence in the nation’s banking system.

It can be recalled that in the mid 1990’s, ROVIABANK was seized by the then National Bank of Liberia for a brief period. Though the seizure was lifted, the bank has yet to reopen to the public because of the adverse investment climate then in the country.

However, the shareholders have been working with the CBL since 2004 in implementing a series of actions to fully comply with the requirements of the New Financial Institution Act and reopen the bank for normal operations. This depositors’ payout is part of the actions agreed to by the CBL and the bank’s shareholders under the reorganization plan.

When asked why would the bank choose to voluntarily pay its depositors when it expects to reopen soon, Mr. Merab said that the shareholders believe the best way to keep a good relationship with customers is to honor obligations and not to continuously hold their funds against their will. He said that in 1995 the bank paid most of its customers before folding its operations, thereby maintaining its confidence and image in the market.

He said this payout is for those who chose not to withdraw their funds then, because many of them had expected the bank to reopen soon. He further indicated that the exercise would provide relief to many people and serve as a good signal that the banking system is making a turn-around as the country recovers from the several years of war.

Mr. Merab disclosed that the shareholders are currently undertaking what he called a road show to present to potential investors the great investment opportunities that are available at ROVIABANK and in Liberia in the hope of recapitalizing the bank.

He said that they have seen strong interest in the bank and are observing the business climate because a decision to reopen will be based on the conviction that ROVIABANK will be a strong competitor in this market.