HomeBusiness DigestBanks demand Zimdollar losses compensation

Banks demand Zimdollar losses compensation

THE banking sector is demanding for finalisation in the demonetisation and reimbursement of the Zimbabwe dollar balances, the Bankers’ Association of Zimbabwe (BAZ) has said

Fidelity Mhlanga

BAZ president Sam Malaba said banks would appreciate progress towards closure as far as demonetisation and compensation as a way to re-establish confidence in the banking sector.

In December last year, Finance Minister Patrick Chinamasa said that US$20 million would be needed to compensate depositors who lost their money after the introduction of the multiple currency system.

Malaba said the RBZ should expedite its recapitalisation, establish the interbank market facility, resume of lender-of-last-resort function and introduce special coins.

He said that the total annual growth of banks in domestic credit rose by 6,2% largely reflecting an 86,9% increase in net credit to government due to treasury bills issues to banks.

The BAZ president said that during the same period, credit to the private sector declined by 1,5% showing growing concerns regarding corporate indebtedness and rising corporate non-performing loans (NPLs) which are over US$700 million.

He said banks welcomed the setting up of Zimbabwe Asset Management Corporation (zamco) to acquire the NPLs of banks as a welcome development as banks are currently saddled with NPLs in excess of US$800m.

“These developments have resulted in NPLs rising from 15,9% in December 2013 to 18,5% in June 2014 and to 20% by end of October 2014.The ever greening of non-performing loans means that the levels could be significantly higher, ” Malaba said.

He said banking sector will continue to face challenges in 2015 due to the prevailing harsh macro-economic environment, warning that further restructuring in the financial sector was inevitable.

“Some institutions will address their challenges though injection of equity from shareholders, some may lose their operating licenses if they are unable to address their liquidity challenges, whilst others will implement cost-cutting measures, including staff rationalisation and closure of branches. Notwithstanding these challenges, the banking sector will continue to be resilient and will generally be safe and sound,” said Malaba

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