TBs can be lodged as security for loans: ZB

ZB Bank has said it is happy to buy Treasury Bills (TBs) from customers including the government through outright purchases or buyback arrangements.

BY FIDELITY MHLANGA

This comes at a time when the government has been issuing out TBs to repay its debts to companies.

ZB corporate banking relationship manager, Nasser Chimbwanda, said the TBs can be used as security for borrowings.

“The bank is happy to buy Treasury Bills either through outright purchases or buyback arrangement or uses those Treasury Bills as security for borrowings,” Chimbwanda told delegates at the e-banking breakfast meeting.

The government, through the Reserve Bank of Zimbabwe, has issued $2 billion worth of.

Treasury Bills from 2012 to December last year amid fears that the phenomenon was a new form of money printing with a huge potential to jeopardise the economic stability in the future.

However, in his budget statement Finance minister Patrick Chinamasa said the fiscal framework for the 2017 budget discourages the expectation and perceptions that Treasury Bill issuances were now a form of surrogate currency to settle government expenditure, as doing so would only pose challenges of capacity for the government to repay on such obligations.

Chimbwanda said an outright purchase would involve ZB Bank buying the TBs from customers, thereby transferring the ownership to banks. In this instance, under this option funds would be immediately disbursed.

On the buyback transaction, Chimbwanda said ZB Bank and the customer enter into a Treasury Bills buyback arrangement wherein ZB Bank would buy the Treasury Bills from the customer at an agreed rate and then resell them to the same customer at an agreed future date and rate.

The bank would charge arrangement fees under this option and funds would be immediately disbursed, he said.

“ZB Bank would consider funding requests from customers, but would be happy to discount the TBs as a financing instrument. This option would see ZB Bank advancing credit facilities to the customer with the TBs acting as security,” he said.

Chimbwanda added that the bank was driven by technology to help its clients wherever they are through comprehensive internet banking, mobile banking products and smart ATMs that allow one to make transfers and deposit cash.

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