Interbank facility operational soon

Published: 09 May 2014

THE interbank market will soon be operational amid indications banks will receive the facility agreements next week.

The new Bankers Association of Zimbabwe (Baz) president, Sam Malaba said the Afreximbank $100 million facility was being finalised.

Finance minister Patrick Chinamasa announced the setting up of the facility when he presented the 2014 national budget in December last year.

"Afreximbank is finalising the facility agreements," Malaba told businessdigest in an interview this week. "We expect to receive the facility agreements by the end of this week."

He said the interbank market facility would be funded under the Afreximbank $100million and would assist in addressing the liquidity challenges facing the banking sector.

Malaba revealed that Baz was working closely with government on the proposed Banking Act amendments, adding banks have met Chinamasa to discuss the matter.

"The proposed amendments will enhance good corporate governance as well as address the establishment of the National Credit Reference Bureau and office of the Public Financial Protector," Malaba said.

He said the banking sector was facing challenges of information asymmetry on borrowers that are multi-banked and borrow from many banks. Such information disclosure, Malaba said, was necessary for the banks to minimise risks which necessitated the setting up of the National Credit Bureau.

He pointed out that other measures which will be addressed included the proposed establishment of the Special Purpose Vehicle to deal with non-performing loans of banks.

Malaba said his objectives as Baz president was to continue the good work which was being implemented by his predecessor George Guvamatanga.

"Baz will be seized with issues of restoration of confidence in the banking sector, which will require close collaboration and consultation with the Reserve Bank of Zimbabwe and the Ministry of Finance to address pending baking sector issues," Malaba said.

He welcomed the recent surge in investments in the banking sector.

Afrasia Bank Ltd recently increased its shareholding in Afrasia Zimbabwe Holdings Limited to 62,5% , following the injection of an additional $20 million.

The injection of $20 million into the local financial institution came hot on the heels of the recently acquired ABC Holdings majority stake by international investor Atlas Mara.

A Russian investor is reportedly interested in acquiring a controlling stake in Tetrad Investment Bank.

"Baz is very pleased with the surge in new investments in the banking sector as part of ongoing recapitalisation efforts to meet the minimum capital threshold as required by the monetary authorities," he said.

"The banking sector needs new capital and the whole economy requires domestic as well as foreign direct investments in key sectors to unlock the economy's potential for growth to underpin national development, poverty alleviation and broad based transformation."

Malaba, who is also Agribank CEO, said the bank would welcome similar investment but only after it was recapitalised by the government.

He dismissed reports of depositor flight from banks, saying that there has been a steady increase in deposits since last year.

"The reports of flight of depositors are not true," he said "Going by statistics, deposits in the banking sector have actually increased."

On the high vulnerabilities in the banking sector noted in a recent World Bank Report, Malaba said these were not different from those identified by Baz and the government. He added that the government was attending to issues relating to them which include the assumption of the central bank $1,35 billion debt and the restoration of corporate foreign currency accounts.

He expressed concern over the continued speculation of the imminent return of the Zimbabwe Dollar which was abandoned in 2009 due to hyperinflation. He said the multi-currency regime "is here to stay" as even the government blueprint the Zimbabwe Agenda for Sustainable Socio Economic Transformation was based on the continued use of foreign currency.

Malaba said Agribank was in the process of recovering debts owed to it and expected to have made significant progress by the end of the year.

"The recovery of debts is a work in progress and we are hoping by the end of the year we will have significant reduction of impairments," Malaba said
- independent