THE Bankers Association of Zimbabwe (Baz) on Tuesday launched its Code of Banking Practice which will be observed by all commercial and merchant banks operating in Zimbabwe. <
A Baz spokesperson said the banking industry acknowledges that its image in the eyes of the public has not been good over the past few years, largely due to lack of communication and silence in the wake of mainly “unfounded criticism”.
“A decision was reached to introduce a booklet that would spell out a code of conduct for banks to apply and means by which the public could have grievances independently investigated,” the spokesperson said.
“The code which has been devised is based to a large degree on similar codes adopted in the United Kingdom and neighbouring South Africa.”
The Baz spokesperson said it was anticipated that by spelling out a code of conduct under which banks operate, disputes would be minimised as the rights and obligations of both parties would, in most cases, be clear.
“However, it is inevitable that a mechanism for the resolution of disputes is necessary and to this end Mr Muchadeyi Masunda (chairman), founder of the Arbitration Centre, and Mr Jim Back and Mr Eric Kahari have agreed to serve on an adjudication committee,” the spokesperson said.
“The committee members are all prominent lawyers. At no cost to the complainant, the adjudicators will rule on any complaint which the parties have not been able to resolve.”
All commercial and merchant banks operating in Zimbabwe are members of the association and have agreed to be bound by the code of conduct.
Zimbabwe Financial Holdings chief executive officer Elisha Mushayakarara as president and prominent banker Frank Read as director currently lead Baz.
When he made his maiden monetary policy statement in December last year, Reserve Bank of Zimbabwe governor Gideon Gono described the financial services sector as being in a “near shambles”.
“The curtain has been drawn against the era for the proliferation of weak, poorly managed financial institutions dependent on cheap and unlimited central bank credit,” Gono said.
“On-site and off-site examinations will be intensified and adherence to international best practice and responsible behaviour required of all financial institutions.”
He said asset management firms, on the other hand, were an “accident waiting to happen”.
“The underground nature of some asset management companies is evidenced by the fact that they do not even have physical addresses or working contact telephone numbers, which makes it all the more difficult to gather information about them,” Gono said.
“The fact that asset management companies are not properly monitored, or supervised by the Reserve Bank poses a serious threat to the stability, soundness and safety of the financial system.”
Immediately following Gono’s statement a huge scandal was unearthed at ENG Asset Management where directors had abused more than $61 billion in client funds.
ENG was an off-shoot of Century Holdings Ltd.
Trust Banking Corporation, Century Holdings Ltd and NMB Holdings Ltd this year came under scrutiny for alleged financial mismanagement.
Zimbabwe’s financial world has never been the same since the introduction of Gono’s monetary policy with some institutions that were grossly undercapitalised being put under curatorship or closed.
Several mergers and takeovers are now in the offing as the sector tries to meet the new stringent RBZ regulations.
CFX took over Century this week and listed on the Zimbabwe Stock Exchange.
Trust is still, meanwhile, trying to find a partner. So are First Bank and NMB.