This year has been the annus horribilis for Zimbabwe’s financial sector which has suffered its worst crisis that left thousands without access to their salaries and savings in banks forcibly closed by authorities.
December 31 last year saw the arrest of two directors of an asset management company for a 61-billion Zimbabwean dollar (US$9,8-billion) fraud, followed by the closure of their company by the central bank.
This set the tone for a crisis-ridden year for depositors.
The year 2004 saw the arrest of dozens of high-profile bankers and the flight into ”exile” of several others facing various financial charges, including spiriting out desperately needed foreign exchange overseas.
After the January closure of ENG asset management firm, more banks and financial institutions fell like a house of cards.
By Christmas Day this year, the Reserve Bank had shut down seven banks, three of them listed on the stock exchange, and placed them under the control of independent regulators, but several others face an uncertain future.
The collapsed banks had all been locally-owned, recently established as part of government efforts to fight the monopoly hitherto enjoyed by international banks.
The financial sector has been blamed for plunging the country into its worst economic crisis in living memory.
The central bank has warned that it will step up efforts to ”smoke out errant bankers”.
Central bank governor Gideon Gono said the house-cleaning exercise in the banking sector ”has helped a great deal to avoid a system-wide collapse of our financial sector”.
In frantic efforts to mend the country’s sickly economy and salvage the banking sector once touted as the country’s success story, the central bank introduced a troubled bank fund to help with liquidity support while proposing mergers of ailing banks.
But both the proposed mergers and the rescue package have failed to stop banks from falling into curatorship.
The first ‘successfully’ merged group, CFX, became the latest casualty, closing days before Christmas, barely two months after the deal was concluded.
The government now plans to bring the troubled banks together under the umbrella of the Zimbabwe Allied Banking Group, modeled on the lines of South Africa’s Absa and to start operating in the New Year.
As the year draws to a close, speculation is rife on which banks will survive the purge and which of the less than half a dozen locally-owned banks still operating will go under.
Zimbabwe’s financial woes stretch back for several years when international lenders pulled out due to disagreements with President Robert Mugabe’s government.
The troubles worsened over the last three years with inflation trebling to 600% at the start of the year, poverty levels doubling and the economy contracting 30%, with unemployment up to a record 70%.
Inflation has over the past 11 months fallen from 622% to 149% last month but remained one of the highest in the world. – Sapa-AFP