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13 Jun 2014 00:00
After Standard Chartered said it may have to withdraw from Zimbabwe because of the indigenisation policy, Reserve Bank governor John Mangudya issued a statement saying the policy would be applied differently for banks. (AFP)
Reserve Bank governor John Mangudya is moving to allay fears of a mass exit by foreign-owned banks in protest against the indigenisation law that would compel them to surrender part of their shareholding to local partners.
A banking sector source said that at least three international banks had indicated that they would withdraw from the country to protect their brands should they be forced to lose control of their assets.
There are two British-owned banks – Standard Chartered and Barclays – and two South African-owned banks – MBCA Bank, which is controlled by Nedbank, and Stanbic, which is controlled by Standard Bank – in Zimbabwe
Mangudya said: “In terms of the banking regulations, financial institutions in Zimbabwe or financial institutions under the supervision of a financial services regulator outside Zimbabwe are allowed to take up to [a] 100% shareholding in a banking institution in Zimbabwe.”
The government, including President Robert Mugabe, has previously said the banking sector would not be immune to an indigenisation campaign, under which all sectors will be forced to give at least a 51% shareholding to indigenous black Zimbabweans in terms of the Indigenisation and Economic Empowerment Act.
Mangudya’s statement came after Standard Chartered’s Africa chief executive Diana Layfield told the Wall Street Journal two weeks ago that the bank could be forced to abandon its operations in Zimbabwe if the government pushes ahead with plans to limit foreign investors’ holdings in banks to 25%.
Misrepresentation Mangudya said there was misrepresentation regarding levels of shareholding in banking institutions, noting that “the proposed changes in shareholding limits are not meant to result in divestiture of shareholding”.
The Bankers Association of Zimbabwe (BAZ) has said any plans to force foreign-owned banks to indigenise would be ruinous.
“International banks are fundamental for raising developmental working capital and trade finance in offshore markets. The existence of internationally owned institutions inspires much-needed confidence in Zimbabwe and brand names and equity are important to companies, whether local or foreign,” the association said.
Defending the foreign-owned banks, BAZ said the banks had mobilised as much as $300-million in loans to support tobacco, mining, cotton and other key sectors.
“These facilities, which are being provided by international banks, could grow to $1-billion as global and local economic confidence increases.”
Reserve Bank officials said amendments to the Banking Act are on the cards and will address ownership of local banks after shareholder abuse of depositor funds had resulted in the collapse of over 20 financial institutions since 2004.
A banking sector source indicated that Mangudya had the support of his principal, Patrick Chinamasa, the finance minister, who accepted that international banks were better placed than local banks to mobilise foreign lines of credit.
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