Get more Mail & Guardian
Subscribe or Login

Zim: Moves to calm jittery banks

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%.

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.

Vote for an informed choice

We’re dropping the paywall this week so that everyone can access all our stories for free, and get the information they need in the run up to the local government elections. For the latest updates and political analysis, sign up to our daily elections newsletter.

If our coverage helps inform your decision, cast your vote for an informed public and join our subscriber community. Right now, a full year’s access is just R510, half the usual cost. Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.

Related stories


Already a subscriber? Sign in here


Latest stories

DA councillor in Ramaphosa’s ward wants his vote

The president lives in ward 90, which includes the wealthy suburb of Hyde Park

Mkhwebane to forge ahead with blocking Mabuyane’s judicial review

The Eastern Cape premier has been granted a temporary reprieve from the public protector’s remedial action, but the fight is far from over

Nongoma NFP candidate the latest victim of KwaZulu-Natal’s killing fields

National Freedom Party candidates in the Zululand town have gone into hiding amid fears that they will be targeted next

Khaya Koko: Katlehong is Mzwandile Masina’s ‘Animal Farm’

The Ekurhuleni mayor’s family home and the Katlehong section in which it is situated are spared the debilitating five-hour blackouts from powerless Eskom

press releases

Loading latest Press Releases…