KWEKWE — Industry and Commerce minister Welshman Ncube has described a move to compel foreign-owned banks to sell 51% ownership to locals like all other companies as “pure madness”.
This follows Indigenisation and Empowerment minister Saviour Kasukuwere’s crusade to force foreign banks to sell their majority shareholding to locals.
Kasukuwere last month clashed with Finance minister Tendai Biti after the latter said individuals who wanted to enter the banking sector should apply for licences.
Ncube told a Press briefing in Kwekwe recently: “There is an aspect of saying the financial sector should indigenise like all the other sectors, this again is pure madness. You can’t build a kraal and say I want to keep capital in that kraal. You can make whatever decree and laws you want, but capital will move to wherever it feels comfortable.
You can be as angry as you want, but you can never decree that pigs will fly, they won’t.”
Ncube urged monetary authorities to review mandatory minimum capital requirements’ that should be lodged with the Reserve Bank of Zimbabwe (RBZ) and base them on the size of financial institutions.
He said some banks were small and had no ambitions of growing hence there was no need to ask them to deposit huge amounts with the central bank.
Ncube said the RBZ should, therefore, work on a model which allows small players to enter the banking sector and serve a market which suits their purse. Currently, merchant and commercial banks are required to deposit $10 million and $12,5 million respectively.
“What sense does it make to say big banks like Barclays and Standard Chartered who are lending to everyone should have the same capital requirements with this small bank which is just lending to a niche market?” asked Ncube.
The minister said it would be wise for the monetary authorities to consider grading banks by their size and, thereafter, structure capital requirements accordingly.
“Naturally some banks are big and some small, so why not say if you want to stay small, you have a small capital requirement and you can only guarantee small loans and if you want to play big, then we ask you do you have the capital for the big boys,” he said.
Ncube’s statements come at a time when several indigenous banks have been struggling to meet the RBZ capital requirements.