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RBZ Rejects 990 Bank Transactions |
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 OVER
990 transactions by commercial banks and building
societies valued at $34 trillion were dishonoured by the
Reserve Bank last week as the liquidity crunch at
financial institutions deepened after they illegally
routed depositors' funds into the stock exchange and
money market. Confidential documents in the possession
of the Zimbabwe Independent revealed that as at January
23 the central bank refused to honour 999 transactions
valued at $33,9 trillion from 18 commercial banks and
building societies due to lack of funding by the
financial institutions. |
The transactions were done through the wire transfer scheme, Real Time Gross
Settlement (RTGS). The liquidity crisis prompted banks to write to the RBZ
seeking expensive unsecured accommodation to meet depositors' demands. An
average of 22% of depositors' money was invested in shares, money market
investments and other securities by almost every bank and building society in
the country.
Most of the dishonoured payments were from Standard Chartered Bank which had 374
transactions valued at $14,6 trillion, followed by ZB Bank with $5,8 trillion
for 149 arrangements, and Beverley with $4 trillion for 80 dealings. Kingdom had
five dishonoured transactions valued at about $1,7 trillion, followed by ZABG
with $1,5 trillion for 42 dealings and Intermarket Building Society with $1,5
trillion for 18 arrangements. FBC had its 11 transactions valued at $,1,2
trillion referred to drawer, Barclays Bank had three dealings worth $947 billion
dishonoured while CBZ had six transactions valued at $698 billion rejected.
The RBZ also refused to honour Tetrad's 92 transactions valued at $614 billion,
Premier Bank's 184 dealings worth $566 billion and ABC's five transactions
valued at $405 billion. The central bank further declined to honour Genesis' six
transactions valued at $167 billion, Renaissance Bank's four dealings valued at
$123 billion, Metro's five arrangements worth $105 billion, CFX's seven
transactions worth $68 billion, NDH's six dealings valued at $50 billion and
Interfin's two transactions worth $31 billion.
"With such huge dishonoured payments, there is likely to be a public outcry
emanating from clients whose payment instructions are not being executed by
banks," reads one of the confidential documents on the state of the financial
sector in the country.
The document revealed that the RBZ would not allow this to continue as it may
dampen the confidence in the RTGS system, pushing more people back to the use of
cash.
"The series of the letters that are being sent to the Reserve Bank clearly shows
how banks, large and small, are admitting to misallocation of depositors' funds,
leading to inability to payout withdrawal requests," the document read. "It is
clearly explanatory in some of the letters in the governor (Gideon Gono)'s
possession that some banks are admitting to having stashed money in shares."
Also apparent in the document was confession by the banks that they do not even
have security against which to borrow from the central bank, hence their pleas
for unsecured borrowing.
"The critical value of this exposition is that it underscores monetary
authorities' point that some banks have been and are engaging in unethical and
imprudent behaviour, in the process imposing intolerable frustrations to
depositors who would have worked so hard for their money," the document added.
In response, the RBZ with effect from January 25 tightened its accommodation
policy in a bid to force banks to shun "selfish and self-serving tactics that
needlessly tie up depositors' funds in dark corridors" not easily reachable when
people want their money. The central bank came up with a stratified
accommodation policy that dictates that all secured borrowings by banks of up to
$1 trillion shall be at the prevailing unchanged overnight rate of 975%. Any
excess secured borrowing over and above $1 trillion would be at the escalated
deterrent accommodation rate of 1 200% overnight, up from 975%.
All unsecured borrowing would attract a penal rate of 1 500% overnight, a rate
which came into effect on January 23, up from 975%. "On all loans provided under
the Reserve Bank's accommodation window, interest on all prior accommodation
must be paid in full before any consideration for a new loan or roll-over is
done," the document read.
Last week, the Independent revealed that some banks, among them Kingdom and ZABG,
were facing serious liquidity problems and owed the central bank trillions of
dollars in non-payment of statutory reserves and interest.
ZABG became one of the first banks to write to Gono last week requesting $2,5
trillion for unsecured accommodation.
The bank revealed to the RBZ that it had underwritten two initial public
officers by under performing property firms -- Pearl Properties and Zimre
Properties. ZABG has over 8,5 million shares in Pearl Properties and 5,2 million
shares in Zimre Properties. The bank said it would repay the RBZ through the
sale of its shares in the two real estate companies.
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| source: allafrica.com |
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