Zimbabwe gives banks including Barclays ultimatum
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.
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.”