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6 banks contribute to interbank facility


THE Reserve Bank of Zimbabwe (RBZ) has announced that the interbank facility guaranteed by the African Import Bank (Afreximbank) now has $120 million after six local banks contributed $20 million.


The facility, the African Export Import Bank Trade Debt Backed Securities (Aftrades), was launched in March with an initial pool of $100 million to help in the distribution of liquidity in the banking sector.

RBZ governor John Mangudya told NewsDay that six banks have contributed to the facility and “we want to increase the funds”.
“The Aftrades have lower risks than when banks lend to individuals and companies,” he said.

Mangudya said Aftrades have also helped in the reduction of interest rates being witnessed in the market, adding that banks were now aligning interest to the calls by government.

“In Aftrades, banks are borrowing from that window 10% per annum quid pro quo given that they are supposed to play their part if they get 10% and lend it at 20% they benefit from arbitrage opportunities which is a moral hazard. A person who would have put money in that window gets 7-8% and someone uses that money to make double,” Mangudya said.

“So we are saying in view of that, it is necessary for the banks to reduce their interest rates in sync with what we are doing under Aftrades and Zamco, cleaning the balance sheets of bank so we don’t want to continue to produce non-performing loans. Although we cannot force them we want to ensure that they see light at the end of the day and be counted in the restoration of business.”

Some of the banks that have reduced their interest rates include ZB Bank, FBC Bank and others.

The interbank facility is managed by RBZ as an agent bank for Afreximbank for the purposes of managing the surplus and deficit participants’ requirements.

The surplus banks’ risk under Aftrades would be transferred offshore to Afreximbank.

The interbank market allows banks to extend loans to one another for a specified term. Most interbank loans are for maturities of one week or less; the majority being overnight.

The absence of an interbank market had resulted in the market being segmented with some banks having huge surpluses while others have experienced liquidity challenges.

Under normal circumstances, liquidity would have moved from the surplus institutions to those experiencing shortages through the interbank market.

Banks with excess liquidity were averse to lending to those experiencing shortages due to credit risk issues associated with those institutions.

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