FINANCE Minister Tendai Biti has vowed to tighten banking regulation and further increase minimum capital requirements, accusing the sector of ripping off customers through extortionate service charges while refusing to back economic recovery efforts.
Presenting his 2013 national budget to Parliament Thursday, Biti said new measure would be taken to address what he described as virtual monopolies in the country’s banking sector.
“What we have in the banking sector is not what we envisaged we have four banks controlling 80% of the deposits,” he said.
“In the past we refrained from regulating the sector, but we have seen monopolies, and this leads to market failure and because of this we are moving in to regulate the sector starting with the upwards revision of bank capitalisation, also the repatriation of 70% held by banks in the Nostro accounts as well as amend the Banking Act where we would want to know the actual shareholders.”
The measures appear to be pay-back time for the banks Biti, together with central bank chief, Gideon Gono failed to sell treasury bills to foreign banks in recent months.
Three offers of the bills worth US$30 million collapsed after the banks offered interest rates unacceptable to the government.
“There’s a lack of strategic thinking by foreign-owned banks operating in Zimbabwe,” Biti said. “I am extremely mortified and mystified by them. We are now moving in to regulate the sector.”
“We have had misadventures on the issue of treasury bills and we are now taking major measures to resolve this,” said Biti.
“The Bankers’ Association of Zimbabwe and the central bank will have to sit down and agree on the manner on which the lending rate is defined.”
Biti said four banks hold 80 percent of all deposits in Zimbabwe. He didn’t name the banks.
However, Gono singled Barclays and Standard Chartered early this month as warned that “extraordinary measures” would be taken to ensure the sector supports government attempts to raise millions of dollars to support the economy.
“Let me express the central bank and the government’s disappointment as well over the behaviour of the banks, especially the foreign-owned institutions towards the issuance of the Treasury bills,” Gono said in Harare at the launch of the Banks Survey.
“All the issues have met with some level of resistance. We had hoped with the take-up we would smoothe the operations of the sector by bringing about additional liquidity on the market. But some banks, particularly the foreign-owned banks, have not played ball.
“The long and short story of it is that just like an eye for an eye leaves the world blind, a snub begets a snub. We as the RBZ Board and as monetary authorities and as Treasury tried to use moral suasion but none of these apparatus have worked.
“Extraordinary circumstances require extraordinary measures. We will be introducing a battery of measures that will ensure compliance.”