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Report: DRC central bank ordered to halt loans to struggling lender

The prime minister of the Democratic Republic of the Congohas ordered the country's central bank to stop making loans to a strugglinglocal lender because of the effect on the country's currency, Bloomberg Newsreported.

Augustin Matata Ponyo's office said central bank officialshad been allowing BanqueInternationale pour l'Afrique au Congo customers to take outdeposits despite cash withdrawal limits by generating funds at the central bankthat are not backed by collateral. Since taking statutory controlof the lender in May, the central bank has loaned it 125 billion Congolesefrancs to help address a continuing liquidity crisis, Bloomberg noted.  

Ponyo's office said "drastic measures" wererequired to "stop this financial mafia installed at BIAC with connectionsto the central bank," the newswire added. Ponyo also said the centralbank's continued lending to BIAC has weakened the currency.

The central bank managed BIAC for six months throughFebruary, at which point the government told the central bank to end a 44billion franc line of credit for BIAC. That prompted a run on deposits and amanagement change,followed by the central bank's taking control in May.

The central bank is in search of investors to help theailing bank through recapitalization, the newswire added.

As of July 20, US$1was equivalent to 965 Congolese francs.