FOREIGN-OWNED banks are sitting on a cash pile of more than US$500 million and resisting pressure to support the domestic economy, even as companies are forced to shut down due to lack of funding, a senior banking executive has said.
"We are asking the foreign-controlled commercial banks to give us the cash at reasonable interest rates so that it can be passed onto the money market and help solve the current cash crisis Zimbabweans are facing,” the banker said, asking not to be named.
“Why should they hold onto more than US$500 million among themselves? This should not be allowed and we are engaging the central bank over the issue."
Efforts to help the country’s economy recover from a decade-long recession continue to be hampered by the lack of funding with the international donor community and multi-lateral lenders providing minimal support while the local financial services sector is said to lack the capacity.
Most companies are said to be operating well below capacity with Bulawayo, the country’s second largest city, among the worst affected as more than 80 firms were forced to shut down in the last year alone.
However, the bank executive said the crisis could be alleviated if multinational banks operating in the country made available for lending the US$500 million in depositors’ cash they are sitting on.
Major foreign banks operating in the country include the United Kingdom domiciled Barclays and Standard Chartered banks as well as South Africa-owned Stanbic.
The bank executive said these institutions benefited from confidence crisis which hit indigenous operators in the last decade resulting in a number of institutions being put under curatorship.
"It is a pity that when the indigenous commercial banks were shut by the RBZ their customers went to the foreign-owned banks and thus there is a lot of cash there,” he said.
“Our sources inform us that about US$500 million is currently in their coffers to-date (and) we believe this cash must be redeployed and invested into the money market to solve the current cash crisis facing Zimbabweans."
Central bank chief, Gideon Gono has also expressed concern at what he described as the “aloof attitude” of multi-national banks regarding the extension of support to the local economy.
“The internationally owned banks are paralysing the money and capital markets by sterilizing huge domestic deposits which funds they are not passing on to the productive sectors of the economy through lending,” Gono said in a monetary policy statement presented in January.
“The low levels of overall loans to deposit ratios at these banks are a development which is constraining the economy’s recovery.”
Figures released by the RBZ then, showed that Barclays Bank had a loans-to-deposits ratio of 25 percent, Stanbic 33 percent and Stanchart 50 percent.
In contrast most indigenous operators averaged above 50 percent with Kingdom Bank advancing 91 percent, CBZ 75 percent, ZB Bank 71 percent.
Gono threatened to take action over the apparent anomalies.
“Over the outlook period, the Reserve Bank will ensure that these retrogressive attitudes and practices are decisively dealt with in the interest of laying a solid foundation for sustainable financial intermediation in the economy,” he said.
The RBZ chief is expected to present his mid-term monetary policy review early next month.