RBZ gives dealers a wide berth

Godfrey Marawanyika

THE Reserve Bank of Zimbabwe (RBZ) is by-passing primary dealers within the financial services sector by selling treasury bills directly to clients.



erdana, Arial, Helvetica, sans-serif”>The latest development comes at a time when the central bank has again re-introduced 90-day treasury bills, moving away from the initial 30-day paper.


The 90-day paper is offering a 265% rate of return. Treasury managers expressed concern that the role of primary dealers in marketing and distributing government securities was no longer the same as the RBZ has now emerged on the scene as a competitor.


This, dealers said, has stirred financial disintermediation within the industry since the RBZ has resorted to dealing directly with corporate investors and other institutional investors.


Some of the large corporates which the central bank has sold government paper directly to include Delta, Innscor, pension funds and insurance firms and a “whole host of others”.


Dealers also expressed concern at active participation on the market by their regulator, saying it affected their profitability.


Bankers have also questioned the merits of the RBZ’s stance and asked for a reconsideration of its continued participation.


Last month the central bank summoned bank treasury heads to expressing its displeasure on the low uptake of TBs.


By the time of going to print the central bank had not yet responded to written questions sent to its office as to why it was actively participating on the market.


Analysts say what the central bank is doing is not proper.


“How can they be a referee and player at the same time?” one analyst said.


“The central bank should spell out its intentions clearly. If it wants to be a player, then it should maybe at least open its own institution.”


Meanwhile, with effect from Monday, the central bank increased overnight accommodation rates.


In a letter to banks, the RBZ division chief for financial markets, Azvinanda Saburi urged banks to start complying with the new accommodation rates.


“We write with reference to the above mentioned subject and advise adjustment on interest rates,” Saburi said.


“With effect from Monday, 12 September 2005, overnight accommodation rates have been adjusted as follows: Overnight rate (secured) 280%, overnight rate (unsecured) 290%.”


Before Monday’s announcement, the overnight rate was 270% whilst unsecured overnight rate was 280%.