Zim­babwe gives banks in­clud­ing Bar­clays ul­ti­ma­tum

The Pak Banker - - Front Page -

HARARE

Zim­bab­wean Fi­nance Min­is­ter Tendai Biti said banks in­clud­ing units of Bar­clays Plc and Stan­dard Char­tered Plc have a last chance to sup­port the cen­tral bank’s Trea­sury bill sales or they will be com­pelled to buy ne­go­tiable cer­tifi­cates of de­posit.

The Harare-based Re­serve Bank of Zim­babwe will on Nov. 6 of­fer $30 mil­lion worth of 91-day Trea­sury bills af­ter af­ter two failed of­fer­ings and one par­tially suc­cess­ful sale last month. The sales are the first since 2008, shortly be­fore the coun­try aban­doned its cur­rency in fa­vor of the dol­lar in a bid to curb an in­fla­tion rate that had risen to 500 bil­lion per­cent, ac­cord­ing to the In­ter­na­tional Mone­tary Fund.

“I am giv­ing the banks sec­tor the last chance to fully sup­port the Trea­sury bills,” Biti, 46, said in a Nov. 3 in­ter­view in the north­west­ern re­sort town of Vic­to­ria Falls. “If they don’t sup­port it, I will is­sue NCDs and that’s it.”

Biti and the cen­tral bank are try­ing to kick-start the coun­try’s cap­i­tal mar­kets af­ter a decade-long re­ces­sion ended in 2009 af­ter the 15-na­tion South­ern African Demo­cratic Community ne­go­ti­ated a set­tle­ment that ended a po­lit­i­cal dis­pute. A coali­tion gov­ern­ment be­tween Pres­i­dent Robert Mu­gabe’s Zim­babwe African Na­tional UnionPa­tri­otic Front and the Move­ment for Demo­cratic Change of Prime Min­is­ter Mor­gan Ts­van­gi­rai was then formed.

On Oct. 26, the cen­tral bank of­fered $15 mil­lion of the se­cu­ri­ties of which $9.9 mil­lion were sold at an av­er­age yield of 8.51 per­cent. The bank re­jected all bids at at­tempted sales on Oct. 4 and Oct. 24.

The plan to restart the bill sales was an­nounced in July by Gideon Gono, the cen­tral bank gover­nor. Zim­babwe lacks a bench­mark in­ter­est rate. The weighted av­er­age lend­ing rate for pri­vate banks ranged from 14 per­cent to 20 per­cent in the four months through July 31, Gono said in a midyear mone­tary pol­icy state­ment.

Bar­clays Bank

of Zim­babwe Ltd. is the big­gest lender by mar­ket value on the Zim­babwe Stock Ex­change with a cap­i­tal­iza­tion of $62 mil­lion while units of Lon­don­based Stan­dard Char­tered as well as Stan­dard Bank (SBK) Group Ltd. and Ned­bank Group Ltd. (NED), both based in Johannesburg, op­er­ate in the coun­try. CBZ Hold­ings Ltd. (CBZ) is the big­gest locally owned bank.

Biti is also in ne­go­ti­a­tions to se­cure fund­ing to re­cap­i­tal­ize the coun­try’s banks and plans fur­ther reg­u­la­tion of the in­dus­try.

In Septem­ber, Global Emerg­ing Mar­kets, a $ 3.4 bil­lion in­vest­ment com­pany with of­fices in Lon­don and New York, said it had pro­posed set­ting up a $1 bil­lion fund in a ven­ture with the fi­nance min­istry to fund banks, es­pe­cially the smaller, locally owned lenders.

“There are dis­cus­sions with par­ties, but it’s not any­where near the $1 bil­lion,” Biti said. “I can’t tell you the fig­ure but, what I can say is that there are var­i­ous ne­go­ti­a­tions tak­ing place.”

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