Generally we trust our banks or, for the more discerning depositors, bankers. I have to trust my banker when it comes to safeguarding the money in my bank account or processing bill payments and other daily transactions.
My banker is one of the few persons I have voluntarily shared with intimate information of my life.
Other than all my personal details, the banker keeps details about my spouse and children, my salary, immovable property. I do not just volunteer this information to my banker, I am compelled to also provide documentary evidence through pay slips, marriage certificate, utility bills, birth certificates, ID, passport and of course my photo.
The banker is the custodian of my profile in virtually all aspects of my life. I have to trust my banker.
And the banker has oftentimes responded to this huge responsibility by welcoming me at her well-appointed and tastefully designed offices where friendly faces behind the counter are living forms of the bank’s branding.
Because I am considered an “important” client, my branch offers extras and little treats like a waiting lounge where I can watch the telly, fix a drink and try to balance my chequebook. This is my version of a queue!
Transactions are carried out in quiet quarters where my banker gives me regal treatment. When exiting, as the guard holds the door for me, an sms comes through my phone to confirm the latest transaction.
All this sort of gives me confidence in the bank. It looks stable. The banker was not grumpy, which perhaps means the financial institution’s numbers are good. There are no signs of cracks or telltale signs of insecurity.
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But I know that the stability of my bank is not demonstrated by the treats in the waiting lounge or the aesthetic displays.
My privilege of profession and office, and access to financial intelligence allows me to make a more thorough examination of my bank. I have to go to these lengths because my bank, like many in the country, does not often make disclosures about its state of health.
Banks in the country always want to give a picture of stability and financial strength. Only recently, Finance minister Tendai Biti warned that more than half a dozen banks were in trouble.
They were failing to meet statutory RBZ capital adequacy requirements. Bankers at these ailing institutions will never reveal to depositors their poor state of health but always a gloss of prosperity.
I often see throngs of people fighting to get into banks towards the end of each month and often wonder whether they know anything about the state of their banks.
But the banks know a lot about these innocent souls. To most people who hold deposits in banks, their appreciation of banking does not go beyond salaries being paid through financial institutions, depositing and withdrawing cash.
They are not conversant with big terms like capital adequacy ratios, loan-to-deposits ratios and so on. In short, they have little means of ascertaining the state of health of banks they do business in.
They do not know when their banks are in trouble and what to do when they go belly up. It is a pity that depositors doing business with troubled banks are in the dark.
A bank, it must be noted, is a commercial enterprise and its goal number one is to make money while serving you. (Just look at the high bank charges and virtually no interest paid each month.
Even my good bank is culpable here.) Many depositors however have a little naive understanding of the banking institutions; they often call it “my bank” (like I do) and are led to believe that anything offered by “their bank” is the best and not to be questioned.
They will wake up one morning to see doors to their bank chained and an RBZ notice proclaiming closure stuck on the door.
In the face of this naivety, depositors in do not have adequate protection.
The Deposits Protection Board (DPB) has not demonstrated capacity to provide cover in the event of a bank collapse.
This board rarely talks about what is does. How many depositors know about this very important outfit?
The board will perhaps emerge from its cocoon at the International Association of Deposit Insurers Africa Regional Committee Annual Conference in Victoria Falls next month. DPB CEO John Chikura will speak on the topic “Establishing & Assessing Strength of Deposit Insurance Systems”.
We want to hear from him what protection the board offers and where depositors can turn to when the cave-in happens.
We want to know how much is in his kitty and how safe we are with banks looking after our little wealth.
The DPB exists as a safety net but it does not look strong enough. I am worried.
After reading this, do you still trust your bank?
•Email me on [email protected] or sms on 0772226840
