Gono, foreign-owned banks clash

RESERVE Bank Governor Gideon Gono has sharply rebuked foreign-owned banks, which he accuses of snubbing efforts to introduce tradeable paper on the market, setting the stage for the imminent introduction of harsh measures to enforce compliance.

Report by Clive Mphambela/Taurai Mangudhla

A visibly frustrated Gono, who was guest of honour at the Zimbabwe Independent Banks and Banking Survey 2012 yesterday, said his office would hit back at the foreign-owned banks for snubbing the Treasury bills.

“While it is true that an eye for an eye leaves the world blind, and love begets love, snubbing the very authorities who have been bruised by verbal shrapnel of the nature we have all been witnesses to … their unstrategic actions can only invite and beget snubs as well,” he said.

Gono, who has been at the forefront of defending the foreign-owned banks, admitted failure of moral suasion and instead threatened to use compulsory means to make the banks comply.

“We have tried as the Reserve Bank board; we have tried as the monetary policy committee of the central bank; we have tried as Treasury to use moral suasion approaches to the sector so that they can see sense in following up on these matters,” Gono lamented.

“None of those approaches have worked and you would know that extraordinary circumstances demand extraordinary measures. We will be introducing a battery of measures that will ensure compliance.”

“Our civility and persuasive approach of the past may have been misconstrued to imply absence of policy instruments and lack of decisiveness. Nothing could be further from the truth.”

In an interview later, Gono said his office would pursue many options, including some where banks would have no way out but to subscribe to the financial instruments.

“We have many options to play with, including the introduction of perfectly legal and legitimate fiscal and monetary instruments in the market whose uptake may be non-negotiable, non-optional,” he said.These could be in the form of statutory deposits, negotiable and non-negotiable certificates of deposits (commonly known as NNCDs), among others.

Gono’s statement comes after repeatedly failed attempts by the apex bank to find a home for idle bank balances in a manner that unlocked value and at the same time re-activating the interbank market and improving liquidity.

In October, Treasury floated an inaugural issue of US$15 million 91-day Treasury bills which were “snubbed” by the financial institutions.

A subsequent tender for US$15 million also flopped while a lukewarm response to a similar issue on October 26 resulted in 89% of bids being accepted with a total US$9,85 million raised at an average rate of 8,5%.

Comments are closed.

Top