Banks offload 600 workers since January

Oliver Kazunga Senior Business Reporter
THE banking sector in the country has offloaded more than 600 workers since January this year following the collapse of a number of banks due to viability constraints.

The development threatens public confidence in the sector viewed as a critical engine in the financing of the economy with the Zimbabwe Banks and Allied Workers Union (Zibawu) calling for concerted efforts to avert further bank closures.

Between January and February the Reserve Bank of Zimbabwe cancelled Allied Bank and AfrAsia Bank Zimbabwe’s operating licences after determining that the financial institutions were no longer in sound financial condition.

Zibawu assistant secretary general Shepherd Ngandu told Business Chronicle that unless the trend changes, more workers from the sector could lose jobs.

“We had projected that by the end of the year we could lose 1,000 workers. If the trend continues, we could end the year having lost about 1,500 employees. Allied Bank has shut down leaving 250 workers jobless while AfrAsia’s closure has affected 379 employees,” said Ngandu.

He said it was the union‘s hope that the trend would not continue during the year, adding that they have petitioned the Reserve Bank of Zimbabwe and Parliament seeking intervention.

“As a matter of fact, we’ve presented our petition to RBZ and Parliament as we seek their intervention. We want RBZ to look into licensing and surveillance issues timeously and be able to deal with issues of poor corporate governance and unsecured loans, which of late are some of the major reasons leading to bank failures in the country,” added Ngandu.

A number of banks such as Tetrad, Trust and Interfin have also fallen by the wayside since the introduction of the multiple currency system in 2009 leaving hundreds stranded.

In a report last Tuesday (March 10) Tetrad Investment Bank provisional judicial manager Winsley Militala highlighted that the bank’s failure was among other things caused by unsecured loans amounting to $25,1 million.

The figure accounts for 40 percent of the institution’s total loan book.

The merchant bank had its operating licence cancelled by the Reserve Bank of Zimbabwe and subsequently placed under provisional judicial management by the Harare High Court on January 29, 2015 after the bank’s liabilities exceeded its assets.

Last year, the Zimbabwe Economic Policy Analysis and Research Unit pointed out that bank failures and the increase in non-performing loans were being exacerbated by a weak supervisory framework to rein in errant bankers.

It said the absence of a supervisory framework created moral hazard (adverse incentives) among bank owners whereby they acted contrary to the interests of their creditors, mainly depositors or government especially where deposits were implicitly insured.