The Mercury

Zim companies reduce borrowing to pay their foreign debt – Barclays

- Tawanda Karombo

COMPANIES in Zimbabwe are reducing borrowings to fund offshore payments, Barclays Zimbabwe managing director, George Guvamatang­a, said last week, adding that the bank was still keen to take up government securities, despite market scepticism over treasury bills.

Barclays Zimbabwe is still controlled by Barclays plc, but the British bank has said that it intends to dispose of in the bank.

A Malawian bank has said in the past few weeks that it is in negotiatio­ns with Barclays plc to acquire the Zimbabwean unit.

Banks in Zimbabwe are required to have capitalisa­tion of $100 million by 2020 and Barclays Zimbabwe has taken a strategy to shore up its capital base to the required level. However, this has come at a cost for shareholde­rs as the bank has not declared a dividend. its interests

“We have had considerat­ions for the need for the bank to meet regulatory requiremen­ts such as minimum capital by 2020. It was considered much more appropriat­e to meet the capital requiremen­t through capital retention,” said Sam Matsekete, chief finance officer for Barclays Zimbabwe.

Barclays says it has witnessed a slow-down in borrowings by financiall­y stretched companies that have accumulate­d backlogs of internatio­nal payments.

The Reserve Bank of Zimbabwe says the backlog in companies’ internatio­nal payments has improved to $185 million.

Guvamatang­a told shareholde­rs at an annual general meeting of the company in Harare last week that the headwinds still persist for the economy and for the banking sector.

“The capacity of the private sector to borrow is becoming constraine­d and there is pressure on disposable incomes.

“We still have pressure on Nostro accounts (internatio­nal accounts that local banks keep to process clients’ offshore transactio­ns and receipts) to fund payments, but the serious question should be whether the pressure on Nostro accounts is real or not,” Guvamatang­a said.

Shareholde­rs in the company have voted to approve non-executive directors’ fees of $200 000 and about $804 000 in fees and bonuses for executive directors.

This was despite earlier concerns raised by some shareholde­rs over the growth in the directors’ fees compared to the bank’s failure to pay a dividend.

Guvamatang­a added that although there had been scepticism over treasury bills that the government is issuing to settle debts owed to companies among others considerat­ions, Barclays Bank Zimbabwe still had appetite for government paper.

The companies for which treasury bills have been issued include Meikles, as well as the Zimbabwe unit of Impala Platinum, Zimplats among others.

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