Zimbabwe Banking Crisis

Zimbabwean companies face increasing problems in making international payments and getting their hands on foreign currency.


This is owing to the termination of correspondent-bank arrangements by international finance institutions, including Germany’s Commerzbank.


The country’s bankers, who are already battling cash shortages, are worried that international banks based in the UK and the US could intensify the severance of ties.


George Guvamatanga, managing director of Barclays Zimbabwe, which is owned by UK bank Barclays, said what kept him awake was if “correspondent banks severed relationships with Zimbabwean banks as a result of the strict know-your-customer and customer due diligence requirements that banks regulated in the US and UK are required to adhere to”.


Guvamatanga said correspondent-bank partnerships remained important for Zimbabwean banks, as “the country relies on correspondent banks for both international payments and cash”.


Most Zimbabwean banks, including CBZ Bank, which is the country’s largest bank, and MBCA Bank, a Nedbank subsidiary, have had to switch their correspondent-bank arrangements in the past few months, sources said.


Simon Hammond, the managing director of CABS, which is an Old Mutual subsidiary, wrote in a letter to clients in June this year: “We will only be processing telegraphic transfers for individuals in rands or Botswana pula.”


Other banks such as MBCA Bank and commercial bank NMB Bank followed suit and sources in the sector said this was precipitated by the banks’ change in correspondent-bank arrangements.


Most banks in Zimbabwe have now roped in Pan-African banking group Ecobank and some Chinese banks as correspondent partners.


NMB Bank CEO Benefit Washaya said the “decision by Commerzbank to ask Zimbabwean banks to close their nostro accounts” held there had forced it to enter into an agreement with the Bank of China and Ecobank.


A nostro account is used for offshore receipts and payments.


Zimbabwean Finance Minister Patrick Chinamasa said in his midterm fiscal policy review that the termination of correspondent agreements for local finance institutions had become “a worrying trend, as it undermines global payments systems, thereby hindering the free flow of international trade and financial transactions”.


Lillian Hapanyengwi, the head of corporate affairs at Standard Chartered Zimbabwe, said in a statement that the bank “reviews its international correspondent-banking relationships on a regular basis in order to maintain a consistent level of compliance with international regulatory requirements”.


“The banking sector is experiencing more stringent and rigorous regulatory requirements, in line with a collective effort to curb money laundering, as well as reduce potential fraud and terror financing,” she said.