Spare a thought for our banks

HARARE - The withdrawal of Trust Bank Corporation’s banking licence is yet another sad story for the fragile sector.

On Friday the bank had its licence revoked for corporate malfeasance and undercapitalisation to end any hopes of revival which had been anchored on a deal negotiated by its management.

Problems at Trust Bank are symptomatic of a volatile economy whose full scale is usually felt by the financial sector.

It is, therefore, wrong to look at the closed bank as an isolated incident bordering on bad corporate governance and nicodemus dealings as tried to be painted by the Reserve Bank of Zimbabwe (RBZ) in its scathing notice of the withdrawing of Trust Bank licence.

There is no secret that the Zimbabwe banking sector is facing serious challenges, including viability problems, all spawned by crunch liquidity issues.

The withdrawal and flight of close to a billion dollars days after the July 31 polls has had a snowballing effect, especially on smaller financial institutions.

There are many that are smouldering and need urgent capitalisation to avoid an armageddon in the banking sector.

Finance minister Patrick Chinamasa and the government need to come up with a comprehensive plan that will attract Foreign Direct Investment because in the absence of that the tight cash squeezes being experienced will remain there.

There has been little, so far, to suggest that investors have warmed up to the Zanu PF government.

Inroads made in trying to charm buyers of our diamonds in Europe are just a small measure of the humongous task that faces government to attract money.

Donors remain sceptical of a Zanu PF government and lines of credit at this juncture are not guaranteed because of our bad debts.

Merging the banks is not the panacea to the current financial woes neither is it the right option at this moment.

Government has inherited the debts of ZBC and the Reserve Bank of Zimbabwe and there is nothing that can stop it coming up with a plan that removes banks from the life support system they are subjected to at the moment.

Of course, this needs sober minds to gain traction in government because suspicion levels are very high in Zanu PF where our local business is concerned.

But suspicion or no suspicion, time is running out for government to steer the economy away from the current problems.

And the full weight of problems afflicting Zimbabwe is being felt in the banking sector.

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