....While the looming crisis threatens the entire banking sector, sources indicated that it was the top five commercial banks -- Standard Chartered, Commercial Bank of Zimbabwe, Barclays Bank, Stanbic Bank and Zimbabwe Banking Corporation -- which were haemorrhaging from a raft of RBZ policies that could precipitate bank failures.
The five banks control close to 90% of all deposits in the financial services sector.
The situation has been compounded by the high statutory reserve requirements for commercial banks which have shifted huge amounts of deposits from the banking system, transferring them to the Reserve Bank. Commercial banks are understood to be holding large TBs in their portfolios, most of which have yields of around 200%.
However, the banks are financing their positions at rates in excess of 850% through the overnight accommodation facility of the central bank, creating big gaps between their financing costs and the cost of their TB assets. The TBs are difficult to redeem for cash until maturity, and this has forced banks to seek recourse to the central bank through the overnight accommodation window to fund short positions.
Under the current regime, banks that have surplus cash are forced to invest in two-year tenor bills with interest rates of 120% if they fail to buy TBs from daily auctions. This policy has been largely viewed as punishing banks that efficiently manage their liquidity positions.
The Bankers Association of Zimbabwe (BAZ) has written to Reserve Bank governor Gideon Gono expressing fears of a major banking crisis unless urgent action is taken. One of the BAZ memos to Gono noted that while smaller banks had been borrowing smaller amounts, these were nevertheless higher than before February.....