The Zimbabwe Banks and Allied Workers Union on Tuesday accused the Reserve Bank of Zimbabwe of failing to institute proper surveillance measures on banks resulting in the crisis gripping the sector. The financial services sector in Zimbabwe has struggled to regain a sound footing six years after the country adopted use of multiple foreign currencies. This has resulted in the closure of nine banks since 2011 mostly due to poor corporate governance, high levels of non-performing loans (NPLs) and high operating expenses. Banks that have folded include Renaissance, Trust, Interfin and more recently Allied and AfrAsia.
In a petition to the RBZ and the National Assembly in which they want both institutions to urgently address challenges facing the financial services sector, Zibawu said the central bank was letting the sector down.
The union said it had expected that after the adoption of multiple foreign currencies, bank closures and problems in the sector would be a thing of the past.
“In our view, the RBZ has not been carrying out its mandate in terms of the (Banking) Act especially when it comes to continuous monitoring, supervision, inspection and investigation of banks,” it said.
“If this mandate is effectively carried out, then some of the malpractices could be detected early and mitigated.” Zibawu said recent bank closures had resulted in the loss of over 1 000 jobs. It said it was now imperative that the RBZ reforms its licensing, surveillance and supervision systems to prevent future bank failures.
“It is our considered view that by simply looking at the malpractices unearthed after the closures in the majority of the failed banks, there is no doubt that the RBZ systems and processes are found wanting.
“Save for a few instances, we observed that the RBZ intervenes in troubled banks when it is already too late,” it said.
Zibawu also asked Parliament to acknowledge the issue of bank closures as a national crisis that needed its urgent attention. There was also an urgent need to reform the Banking Act and address its current deficiencies, it said.
“We seek Members of Parliament to enquire into the causes of bank failures in Zimbabwe, publicise the findings and prescribe measures of bringing to book those responsible including tracking and recovering depositors’ funds. The public and workers would want to know who was responsible for each bank failure.”
In a bid to return normalcy to the sector, the central bank has established the Zimbabwe Asset Management Corporation to purchase NPLs from banks as part of efforts to clean up and strengthen banks’ balance sheets and provide them with the liquidity to fund viable projects in the economy. By August of last year banks were said to be saddled with NPLs worth over $700 million. — BH24.