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More to biggest lender

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CBZ Bank Limited, the country’s largest lender by deposits and loan book, will play intermediary to the multiple lines of credit government has secured from neighbourinf countries and multilateral institutions, according to a source familiar with the deals.
The transactions are seen expanding its off-balance sheet lending portfolio and boosting commission income.
The financial arrangements are government-guaranteed and collateral-free facilities for the local business sector and are subject to Zimbabwe’s preferred draw-down schedules.
They include a 500 million pula (roughly $70 million) line of credit from Botswana, a 70 million rand (about $9 million) facility pledged by the South African government last year and a $50 million fund the government is still negotiating with the Africa Export-import Bank (Afreximbank).
“The details are sketchy because the facilities are still under negotiation. I can’t say much at this point,” John Mangudya, CBZ Bank CEO said.
NewsDay’s source said a delegation from South Africa was in Zimbabwe a fortnight ago to push the $9 million deal to closure. The country partially fulfilled one of the key conditions for the line of credit when it agreed a bilateral investment treaty with South Africa in November last year.
The source also said the money from Botswana would be sitting in CBZ’s account as soon as next month, for disbursement to key sectors once Zimbabwe’s ministries of Finance and Industry agree on a list of priority companies.
Finance Minister, Tendai Biti, says he is making arrangements to take Zimbabwe’s representatives of business to Botswana, at the behest of that country to finalise the modalities for disbursement.
The line of credit, negotiated and guaranteed by the inclusive government on behalf of the local business sector soon after its formation in February last year, is the only one that has materialised so far.
“What I’ll do is take business people to Botswana in the next two weeks. The Ministry of Industry of Botswana has invited us,” Biti said. “But the South Africa one is still under negotiation.”
A source said the bulk of the money would be allocated to strategic companies faced with a crisis of working capital at Libor + 5% per annum.
The lines of credit would offload the high interest burden from local businesses currently plagued by high-cost short-term debts that have aggravated their viability crisis in the last 18 months.
For a tenor of six months, some commercial banks were charging interest rates as high as 30%.
CBZ has retained its traditional role as credit arranger for government and government institutions since 1997 when government shareholding in the bank to 20% from 100% with the entry of ABSA as the single largest shareholder. The stake has come further down to 16,08%.
The arrangements are mostly loan syndications and restructuring.
In the first four months of the year, CBZ Bank reported that total deposits grew 27% to $457 million from $361 million in December 2009 as the loan book grew 29% to $316 million from $245 million during the period, representing a loan/deposit ratio of about 70%.
Interest income grew to 22% with a sizeable part of this coming from off-balance sheet lending.

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