HomeNews‘Foreign banks to divest from Zim’

‘Foreign banks to divest from Zim’


The Economist Intelligence Unit (EIU), an international think-tank, has warned that some foreign-owned banks operating in Zimbabwe could close shop after Indigenisation and Empowerment minister Saviour Kasukuwere recently gazetted regulations for their takeovers.

According to a Government Gazette published two weeks ago, Indigenisation ministry acting secretary George Magosvongwe said foreign-owned banks should within a year dispose of 51% shareholding to locals.

He said the minimum net asset value would be determined by the minimum capital requirements prescribed by the Reserve Bank of Zimbabwe (RBZ).

The ministry’s latest directive targeted Barclays Bank Zimbabwe, majority-owned by Barclays UK, Standard Chartered (UK) and Stanbic (South Africa), both of which are wholly foreign-owned — the Merchant Bank of Central Africa, in which South Africa’s Nedbank has a majority stake, and CABS, which is controlled by another South African operation, Old Mutual.

The initiative has been rejected by Finance minister Tendai Biti and the RBZ governor Gideon Gono, who proposed his own more moderate plan for increased local ownership.

Biti on the other hand blasted the regulations as unlawful.

“Kasukuwere’s comments could damage confidence in the sector and drive away investors, deposits and customers,” the EIU said in an analysis.

“They could also prompt some foreign banks to divest since their Zimbabwean operations are insufficiently profitable to outweigh the ‘hassle factor’.

“It is unclear how the Indigenisation minister intends to implement his proposal.

“The South Africa-owned banks would appear to be protected by the bilateral investment treaty between South Africa and Zimbabwe, which means that the government will have to pay market rates for any shareholding.

“Since the administration is already looking at a hefty budget deficit — and must also pay upwards of $500m if it wants to take a stake in the mining operation controlled by South Africa’s Implats — it does not have the money to pay for bank shares.”

Official figures show that just 15 of the 26 banks in the country made a profit in the first quarter of 2012 and in June one bank, Genesis, was closed by the central bank and Interfin was placed under custodianship.

Meanwhile, Gono has since declared that foreign banks would not be seized “yesterday, today or tomorrow”.

The central bank chief said he would seek a meeting with President Robert Mugabe over the matter.

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