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Gono restores calm to financial sector

Shakeman Mugari

CALM has returned to the financial sector after the Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono issued a statement assuring the market that all was well in the country’s banking frate


Some analysts said the statement issued last Friday brought back confidence in the sector that has been in turmoil for the past three months.

National Discount House (NDH) group chief executive Ernest Matienga said the RBZ statement last week had given a sense of direction to the market. He said the statement cleared the uncertainty that was facing the financial sector, especially the indigenous banks.

“There was a lot of uncertainty in the market because of the crisis in the banking sector. Now we can say sanity is back on the market,” said Matienga.

“There is likely to be a clear direction in the market now that the issue of troubled banks has been explained. The market has a clear picture of almost every bank. There is no panic.”

In his statement Gono said most financial institutions had coped remarkably with the new order.

He said most banks bailed out by the RBZ had made significant progress to address their problems and to reposition themselves in the market.

“The three months window which expired on March 31, allowed some institutions that were confronted with both self-inflicted internal difficulties and exogenous challenges to correct themselves in a manner that should see them coping with the dictates of the new environment,” said Gono.

The statement also indicated that the banking sector is going to have an avalanche of mergers as the troubled institutions struggle to remain afloat.

Metropolitan Bank, Trust Bank, Royal Bank and Century Bank are said to be on the hunt for suitors.

Trust Bank has already been linked with Old Mutual while Century is understood to be in talks with CFX Merchant Bank.

The statement, analysts say, would curb capital flight from the indigenous banks. Over the past two months some banks have witnessed a massive drop in the size of the deposit books owing to panic withdrawals.

Trust Holdings group economist David Mupamhadzi said investor confidence had been propped up by the statement.

“It restored investor confidence which had hit an all-time low as we approached the March 31 deadline for the Troubled Bank Fund. Investors were jittery. The statement propped up their confidence,” said Mupamhadzi.

“Due to the volatility in the market there is need for constant communication from the RBZ to avoid speculation. The moment the investors use speculative information to invest they will fall into the same trap.”

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