Zimbabwe govt wants banks to lower interest rates

By Tawanda Karombo

The three foreign-owned banks facing increased pressure from authorities to comply with the empowerment policy are among the top Zimbabwean banks that are adequately capitalised.

The banks – Standard Chartered‚ Barclays and Stanbic have adequate capital bases while a host of local banks may have to merge and consolidate operations to raise enough capital. CBZ Bank ($111.79m) has the highest capital base followed by Standard Chartered Bank and Stanbic Bank which have capital bases of $56.50m and $45.62m respectively.

Meanwhile all banks will now have to significantly lower interest rates in line with a government directive.

Reserve Bank of Zimbabwe governor‚ Gideon Gono said during his monetary policy presentation on Thursday that the Zimbabwe unit of Barclays Bank had a capital base of $34.30m by the end of December. The majority of the locally owned banks have relatively lower capitalisation levels compared to those of the foreign-owned banks.

Zimbabwean banks have been facing uncertainty over the forced compliance with the empowerment policy and mounting pressure from the government for them to lower interest rates and bank charges. Banks have been charging interest rates of as much as 25% in addition to “high” withdrawal and service charges.

Gono however said “all banks should” comply with the empowerment policy although he added that the central bank was “working together with the Ministry of Indigenisation and Economic Empowerment to ensure that compliance with appropriate laws is done in an orderly manner”.

The central bank and the Finance Ministry have been advocating for lower indigenisation compliance thresholds for the banking sector.

“The process to indigenise the banks should‚ however‚ take cognisance of the sensitivities around the operation of the banks to restore confidence‚ trust and stability in the sector‚” Gono said.

Finance Minister Tendai Biti and Gono have confirmed that the banks and the central bank have now agreed on lowering the highest levels for interest rates.

Banking sector executives said on Friday that interest rates had now been capped at 10%.

“The Reserve Bank and the banking sector came up with an agreed framework which will see substantial reduction in bank charges‚” said Gono.

Although he would not provide finer details‚ Biti also confirmed this development‚ telling a gathering of Zimbabwean industrialists in Harare on Thursday that although he “did not want to regulate” the banks over the issue‚ “there’s been an agreement between the central bank and the Bankers’ Association”.