GLOBAL Credit Ratings Company (GCR), an international rating agency, has placed all of its Zimbabwean bank ratings on rating watch in a new twist to the saga bedevilling money-spinning in the
financial services sector.
The prominent agency this week said the move was a result of the severe liquidity crunch currently being experienced by Zimbabwe’s financial services sector.
GCR director Dave King told businessdigest that the financial market currently has an estimated $180 billion liquidity shortage to contend with and certain banks were apparently struggling to maintain adequate liquidity levels.
So far Trust Financial Holdings Ltd and First Mutual Ltd have confirmed that they have been affected by the ongoing liquidity crisis that has witnessed the Reserve Bank of Zimbabwe (RBZ) conducting spot checks on all financial institutions.
The RBZ has already shut down ENG Financial Services and Century Discount House.
King said by December 31, 2003, overnight rates had increased to more than 750%, from a position of approximately 100% three months ago. RBZ governor Gideon Gono indicated in his recent Monetary Policy Statement that the central bank would not “automatically” support banks experiencing liquidity problems in future.
King said the aforementioned had created a high level of uncertainty in the market and a position where some retailers could be unwilling to accept cheques from certain Zimbabwean banks.
He said as a result of these factors GCR would be closely monitoring and reviewing statistics on all its rated banks so as to better analyse the impact that the current liquidity squeeze is having on the individual participants in the Zimbabwean banking industry.
King said whenever a systemic liquidity crunch looms in a country, it is standard practice for GCR to call on all its rated banks to immediately provide latest management accounts and liquidity data.
“The objective is to be in a position to provide depositors with a factual basis on which to make decisions within the shortest possible time-frame, failing which a rating may have to be withdrawn until such time as the requisite information has been forthcoming and analysed,” he said.
Gono said he would not leave any stone unturned in his endeavour to clear the financial services sector of “criminals” bent on enriching themselves using unorthodox means.