Another blow to local banks

When Silibaziso Msipa and her husband got married three years ago, they did what many young Zimbabwean professionals did: opened accounts with the mushrooming local banks to take advantage of the easy terms. "As newly weds we did not have a lot of money to throw around. Rather than open accounts with the established international banks, we opted for the indigenous banks, which required very little money to open a savings account," Silibaziso, a teacher at one of the affluent private schools in the capital, Harare, told IRIN. Last week, however, panic gripped depositors as they rushed to withdraw their savings, unsure of the stability of Zimbabwean-owned banks. The mass withdrawal was triggered by the unexpected collapse of Trust Bank on Thursday, which left thousands of people unable to access their September salaries or savings. The bank was placed under the management of a firm of accountants and all accounts are to be frozen for six months. The panic was also triggered by the approach of a 30 September deadline imposed by the Reserve Bank of Zimbabwe (RBZ), by which time all financial institutions must have improved their liquidity levels to Zim $10 billion [US $1.8 million] to protect depositors. RBZ governor Gideon Gono warned last week that as many as nine banks could fail that test. An IRIN survey of established banks like Barclays, Standard Chartered and Stanbic, revealed that queues of people wanting to open new accounts had started forming by the end of last week. "I have come to the realisation that it is safer to bank with established international banks than some of the local banks, which have caused a lot of suffering to debositors," explained Siphosami Manyumbu. The opposition Movement for Democratic Change (MDC) has blamed the government for the difficulties faced by the local industry. "The operations of indigenously owned banks have been affected by the monetary policies which have only benefited traditional banks, which have made huge profits," the MDC secretary for economic affairs, Tendai Biti, told IRIN. Gono took over at RBZ in December last year with a mandate to end the crisis in the financial sector, which had seen several local banks fold as a result of cash shortages, high inflation, a weak local currency and under-capitalisation. With the prospect of the collapse of more banks imminent, the RBZ stepped in with an injection of funds, on condition that the rescued banks made changes to their management, and the central bank was given better oversight of their operations.