Tawanda Karombo Harare
THE DEPARTURE of the Steward Bank chief executive and the collapse of Allied Bank in Zimbabwe have cast a cloud of uncertainty over the country’s fragile financial services sector.
Steward Bank’s chief executive is South African Kwanele Ngwenya and Allied Bank is owned by Zimbabwe’s Transport Minister Obert Mpofu.
According to informed sources, two more banks have been placed under close monitoring by the Reserve Bank of Zimbabwe (RBZ). The central bank last year identified about seven banks as needing close attention.
Four key foreign institutions – Standard Chartered, Barclays, Standard Bank and Nedbank – have interests in the Zimbabwean banking industry.
Liquidity problems
The locally owned banks have been struggling under the weight of liquidity constraints and a runaway non-performing loans ratio, prompting Afreximbank to intervene by providing a $100 million (R1.15 billion) interbank facility in 2014.
However, the foreign owned banks are stable, after adopting prudent lending measures and Nedbank as well as Barclays have said their units in the country are in a sound position.
The contract of Ngwenya, who has previously served in Botswana as a banking executive, would not be renewed by Steward Bank, which is controlled by Strive Masiyiwa’s Econet Wireless, the bank’s board announced on Thursday.
His contract will expire at the end of this month and Steward Bank said it would appoint an acting executive to lead the institution.
Other banks said to be on the radar of the central bank include Metbank and AfrAsia Bank’s unit in the country.
Last July, the Reserve Bank of Zimbabwe said that Metbank, Allied Bank, AfrAsia and Tetrad were facing liquidity and solvency challenges due to a number of factors.
Together these four banks have a low market shares in terms of loans (8.8 percent), assets (7.2 percent) and deposits (6.7 percent) as at June 2014.
Metbank had a capitalisation of just below $26m.
By the end of last September, AfrAsia had a capitalisation of $13m, way below the RBZ’s requirements of $25m.
Too late
However, the central bank’s monitoring might have come too late for Allied Bank, which surrendered its banking licence on Thursday.
“The Reserve Bank has determined that the banking institution is no longer in a safe and sound condition in that the institution is grossly undercapitalised and is facing chronic liquidity challenges,” said the Zimbabwean central bank said last week.
In the past two years, at least two other banks, Interfin Bank and another one in which Environment Minister Saviour Kasukuwere was said to have an interest in, have folded up.
Economists have called on the central bank to step up monitoring of the fragile industry and close struggling banks to protect depositors’ funds.
Despite the fragility of the local banks, the government is squeezing the foreign-owned banks to give up majority shares into the hands of black Zimbabwean groups.
Experts say Zimbabwe’s indigenisation policy has deterred potential investors, who are now sceptical of the country’s legislative environment.