THE Reserve Bank of Zimbabwe (RBZ) will now scrutinise the results of all financial counters before they are released in a move designed to further tighten the money-spinning banking sector.<
Responding to written questions from businessdigest, the RBZ yesterday said: “The Reserve Bank, through its Banking Supervision Department, regularly reviews the financial condition and performance of banking institutions.
Banking Supervision has the requisite skills and experience to perform its functions. In order to ensure compliance with the banking regulations, banking institutions are required to submit their financial results to the Reserve Bank before publication.”
Banking industry sources said the move could however result in more problems springing up within the financial sector, as the RBZ would become “an insider” since officials would “know company results before they are made public”.
They said this could result in “insider trading” as individuals took advantage of the privileged information and snapped up or offload shares on the bourse.
Sources said the RBZ wrote to the financial institutions listed on the Zimbabwe Stock Exchange (ZSE) indicating that it would immediately review their financial results.
Banking Regulations, 2000, Part II requires every banking institution to report on a half-yearly – interim and year-end – basis on its financial position in at least two widely circulated national newspapers not later than 60 days after the end of the interim period and 90 days from the production of its final year-end audited results.
It is reliably understood that the new RBZ regulation was instituted after some banks, in their bid to impress the market, published sensitive information regarded as confidential by the central bank.
Among issues that triggered the move were concerns that banks listed on the stock exchange were commenting on the capital adequacy ratio, an issue regarded as confidential.
Under the new regulation the RBZ will deliberate on the result before allowing the statements to be published.
A source said: “The RBZ will recommend some alterations to the results and sensitive information will not be published.”
The central bank moved in with the regulation after Renaissance Merchant Bank, in their last results, published a “confidential rating” that they had been awarded by the RBZ.
In their statement Renaissance published information about the institution’s liquidity and adequacy ratio. “The ratio and rating are confidential issues between the RBZ and the financial house concerned,” a source said.
The new requirement is expected to begin with the upcoming interim results of financial counters.
Some financial institutions confirmed they had received a circular requesting that they submit their results with the central bank before publication.
Century Holdings Ltd confirmed they had received the “memo” and had complied with it. The company’s last results for the three subsidiary companies went through the RBZ and were approved before publication.
NMB Holdings Ltd also confirmed having received a circular from the central bank.
The RBZ said the regulation was in line with the Banking Supervision and Surveillance Department to maintain “sanity in the banking sector”.