Harare - The Zimbabwe unit of UK-based Standard Chartered is owed nearly $28 million (R300m) by the country’s central bank, which accessed foreign currency accounts held on deposit with the British bank by its customers.
Zimbabwean banks – which are battling a tight liquidity crunch that economists say requires external lines of credit to offset – started participating in a reintroduced interbank market last Monday.
Tough economic conditions in the country saw the Standard Chartered unit fall in 2013 to a loss of $9.6m compared with the bank’s profit position of $17.3m in the prior period.
Other foreign-owned banks in Zimbabwe have had mixed fortunes, with Barclays Bank Zimbabwe posting a $2.9m profit last year, while profit at Nedbank-controlled MBCA Bank fell 19 percent to $4m.
“The group has a strong presence in high growth markets and is well positioned to support Zimbabwean businesses in pursuing trade corridor opportunities arising in Asia, the Middle East and indeed within Africa,” Standard Chartered Bank Zimbabwe chairman Samuel Rushwaya said last week.
The bank was owed $27.9m by the Reserve Bank of Zimbabwe in “restricted balances”, which related to “customer foreign currency account funds that were transferred” to the central bank at the height of the Zimbabwean economic crisis that culminated in the adoption of multiple currencies in 2009.
Bank officials said they were unable to use these balances in the bank’s daily operations as they had not been released by the central bank.
The government is in the process of adopting the central bank’s debts.
The country’s total banking sector deposits closed last year at $4.73 billion, said Rushwaya, adding that total loans and advances in the Zimbabwean economy had marginally risen to $3.5bn.
Operating costs in Standard Chartered Bank Zimbabwe quickened to $51m last year from $38m in 2012 after the bank “incurred significant costs in repairs and maintenance of its infrastructural facilities” aimed at realigning its operating platforms.
Foreign banks in Zimbabwe, which also include local divisions of Standard Bank, Ecobank and AfrAsia, are more stable than most of the locally owned banks as they are able to access financial and technical support from their international investors.
Total income in JSE-listed Standard Bank’s Zimbabwe unit, Stanbic Bank, amounted to $79m last year, it said on Friday, with a 13 percent spike in operating expenses leading to a marginal growth in net profit to $18.3m. Profit in the previous year came in at $17.2m.
Sternford Moyo, the chairman of Stanbic Bank Zimbabwe, said the country’s economic challenges required external credit lines. He added that uncertainty on policy issues and rising competition from imports was hampering economic recovery prospects in the country.
“It is also imperative for stakeholders to appreciate that local liquidity is not adequate to fully fund national requirements. Redoubled efforts should be channelled towards improving the country’s investment climate to attract positive net investment into key sectors of the economy,” he said.
The Zimbabwean banks are increasingly switching to electronic and internet banking platforms to reduce costs, with most financial institutions revamping their platforms to reduce transaction volumes carried inside banking halls.
Daniel Sackey, the managing director of Ecobank Zimbabwe, said earlier this month that “at least two thirds of routine customer transactions volumes” that had previously been undertaken in banking halls were now “being completed on ATMs, point-of-sale terminals, retail internet banking and corporate internet banking”.
Standard Bank shares closed 2.29 percent up at R139 on Friday.