RBZ must act now on struggling banks

HARARE - Although the Reserve Bank of Zimbabwe (RBZ) has admitted that four banks in the country are struggling with solvency issues, immediate action must be taken to allow depositors access to their money.

We understand that the economy is currently going through a dry spell due to policy failure and the Zanu PF-led government’s lack of strategy to revive the economy resulting in increased liquidity shortages, but the burden should not be shouldered by poor people.  

For the past few months, depositors have been struggling to get their money from a few struggling financial institutions and the central bank has to come up with solutions to assist the poor citizens whose monies are locked up in banks.

Across the globe, the existence and continued presence of weak banks is a matter of concern to supervisory authorities and we applaud the steps taken by John Mangudya, the RBZ governor, to engage these institutions to come up with credible plans to turnaround their waning financial condition.

In his maiden monetary policy statement presented recently, Mangudya said these struggling institutions should seriously consider consolidations and/or mergers and voluntary surrender of licences if necessary.

While these are noble efforts which will help strengthen the financial services sector in the long term, we strongly believe that the central bank must come to the party and assist the struggling banks secure money for disbursement to depositors.

We are cognisant of the fact that the RBZ role as lender of last resort is currently hampered by the biting liquidity crunch being experienced in the country, but for the sake of preserving the financial services industry, then more action is needed.

If possible, as a temporary measure, the RBZ must force other banks to lend money to the struggling ones so that depositors are not deprived of their hard-earned cash.

Considering the banking crisis experienced during the first half of the last decade, we feel that no bank should be allowed to collapse as this would have a negative impact on the whole industry and the economy as well.

This stems from the fact that no sane investor would bring their money into an economy that has inherent systemic risks on its banking industry, and without new capital, this economy will definitely collapse.

And to avoid this situation, the central bank must pull out all stops to ensure that money keeps circulating in the market.

Comments (4)

Which four banks are these??

ConcernedCLIENT - 12 September 2014

Tetrad, MetBank, Allied Bank & Afrasia

Chandi Nofira - 12 September 2014

How can you even suggest taking deposits from other banks? How will this help the situation? Who is going to pay back the money? A case of robbing Peter to pay Paul - only this time you are worsening the situation by contaminating the "clean" loan books of the healthy banks! This is a NO! NO!

Chandi Nofira - 12 September 2014

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