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RBZ rules out bank shareholding changes

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THE Reserve Bank of Zimbabwe (RBZ) has said it does not plan to reduce the level of institutional shareholding in banks, but is considering raising the threshold for non-financial institutions.
In a statement last Friday the RBZ said it would maintain the status quo allowing financial firms, local or foreign, to have total control as the government moves to assure banks on the country’s controversial ownership laws.
The statement, which follows press reports on proposed changes to banking regulations, comes a day after a dovish speech on bank ownership by Indigenisation Minister Francis Nhema, who said firms operating outside the resources sector would enjoy greater flexibility in the implementation of Zimbabwe’s ownership law, which requires local majority control.
Foreign institutional investors have majority stakes in some of Zimbabwe’s major banks-owned banks, including Barclays, Standard Chartered, Standard Bank, BancABC, MetBank, Afrasia, Ecobank and MBCA.
Financial institutions, local or foreign, are allowed to own up to 100 percent of local banks, while non-financial institutions are currently restricted to 10 percent. Individuals can own up to 25 percent.
“Cognizant of the fact that institutional shareholders, unlike individuals, are more likely able to inject additional capital when called upon to do so, proposals are being made that shareholding limits for companies be increased from the current 10 percent to 25 percent,” the central bank said in a statement.
“Further take note that the current banking laws provide for situations of acquisition of significant interest, which may be in excess of the thresholds specified above in specific instances such as where a banking institution is faced with undercapitalisation.
Banks in capital starved Zimbabwe have struggled to meet staggered capitalization requirements set by the central bank, and many have turned to cash-rich foreign investors.
In January, the central bank has extended the deadline for the achievement of a $100 million minimum capital threshold for commercial banks from 2014 to 2020, as several institutions continue to struggle to shore up their capital levels.
Currently, minimum capital levels are $25 million for commercial banks, $25 million for merchant banks, $20 million for mortgage lenders, $15 million for discount and finance houses and $5 million for micro-finance banks.Advertisement

The central bank said the ongoing review of Zimbabwe’s banking laws was not meant to force investors to divest from the sector.
“For the avoidance of doubt, we wish to clarify that the proposed changes in shareholding limits are not meant to result in divestiture of shareholding.”