Banks face crunch over farm requisitions

Banks in Zimbabwe could find themselves having to write off a debt equivalent to US $118.4 million over the government's decision to seize 804 white-owned farms, the independent weekly newspaper, 'The Financial Gazette' reported on Thursday quoting industry executives.

"The executives estimated the financial sector's exposure to the 804 farms which will be used to resettle landless peasants at between $5 billion and $6 billion, (over US $132 million) although they said it was not yet possible to give accurate figures," the newspaper said.

The Commercial Farmers' Union (CFU) also said it could not provide figures on the debt owed by the designated farms, although CFU deputy director Jerry Grant said the whole commercial farming sector owed about US $1 billion to
the country's banks.

"The government is required to notify anyone with an interest in the land being designated of its intention to acquire the land, and that includes the banks," Grant said. "Any compensation payable should cover the amount owed to the bank and, if it doesn't, it is the obligation of the owner to make up
the shortfall. That's a problem because if farmers are not paid for the value of the land, then what they get may not cover the degree of indebtedness to the bank."

The newspaper quoted analysts as saying banks were likely to end up holding worthless title deeds because the security on which they gave loans to farmers would now belong to the government.