HARARE - Zimbabwean financial institutions are making frantic efforts to secure new nostro accounts holders following the exit of German bank, Commerzbank, from the local market.
Nostro accounts are accounts held in a foreign country by a domestic or local bank which are used to facilitate settlement of foreign exchange and trade transactions.
NMB Bank last week became one of the first local banks to secure new nostro account service providers from international finance institutions.
“...following Commerzbank’s exit from the Zimbabwean market, we have changed our USD correspondent bank to Bank of China, Johannesburg and Ecobank International, France,” the bank said.
“All USD payments directed to Commerzbank will be rejected and will not reach us,” NMB added.
This comes as Germany’s second largest lender, which was last year fined $1,45 billion for allowing transactions with certain clients accused of violating the United States money laundering laws, recently withdrew from Zimbabwe in a move described by market watchers “as a protective measure against US punishment”.
“Commerzbank’s decision not to offer nostro accounts services to local banks could have been triggered by the $2,5 million fine imposed on Barclays by the US Department of Treasury for processing transactions of companies, individuals and related parties on its sanction list,” said an economist with a local bank.
The US Department of the Treasury’s Office of Foreign Assets Control said in an enforcement release that Barclays, through its units in New York, the United Kingdom and Zimbabwe, helped the Industrial Development Corporation of Zimbabwe (IDCZ) and individuals linked to IDCZ, process 159 fund transfers valued at around $3,4 million between July 2008 and September 2013.
Zimbabwe, whose sovereign risk score has remained within the C band, has seen a lot of multinational companies such as Rio Tinto, Murray & Roberts and Reckitt Benckiser among others exiting the country due to a fragile political environment and stunted economic growth.
US based think-tank, Economist Intelligence Unit (EIU), said despite Zimbabwe’s plan to clear its arrears with the Bretton Woods institutions and the African Development Bank (AfDB) by April this year, more needs to be done to bring back investor confidence.
“Any payment of arrears will do little to reduce the country’s overall debt burden,” said the EIU.
Zimbabwe — struggling with a $10 billion external debt — has crafted measures which involve restructuring existing debt, as the country seeks to raise long-term bilateral loans to repay $600 million to the AfDB and $1,15 billion to the World Bank.