Published: 26 July 2013

Finance minister Tendai Biti has warned that 7 commercial banks exposed to local authorities may fold following Local Government minister Ignatius Chombo's directive for municipalities across the country to write off public debt.

Biti said he had a meeting with bankers yesterday morning who were concerned with a purported directive from somewhere to effect that rates and water bills of local authorities have been cancelled.

CBZ is exposed just to the city of Harare to the tune of $13 million.

Biti said no one has the power to make executive decisions at the present moment and there will be a huge multiplier effect on the banks if the directive was followed.

In terms of the status of the banking sector, Biti said as at March 31, only 12 out of 21 operating banking institutions were in compliance with the $25m capital requirements. Of the remaining nine, five were 50% in compliance while four banks had capital less than the 50%.  
- newsday

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