Govt backs Gono’s $100m capital
HARARE – Cabinet has approved the hike in minimum capital requirements for banks to $100 million as proposed by Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono.
When the central bank boss announced the new requirements, there was a huge uproar from some bankers while some politicians even threatened to approach President Robert Mugabe and Prime Minister Morgan Tsvangirai to reverse the decision.
Gono was summoned to Cabinet on Tuesday where he justified the hike and convinced Cabinet, including Mugabe and ministers from both Zanu PF and the MDC that the $100 million capital requirement was the only way to strengthen banks and bring discipline to the financial sector.
Acting Finance minister Gorden Moyo confirmed this at a press conference in Harare yesterday.
“Both Cabinet and Treasury stand by and support the measures announced by the governor. Government is satisfied that the measures announced by monetary authorities are both necessary and good for the economy of Zimbabwe.”
He said financial institutions will now be required to comply with the RBZ directive.
“We support the policy and you (banks) must adhere to these principles. We expect all of you to comply,” Moyo said.
“All banking-sector stakeholders and the public are hereby advised that government stands fully behind the recently announced levels…”
He said government had agreed that the welfare of indigenous banks should be taken into consideration in the implementation of the new thresholds.
“It was agreed the new policy should not suffocate indigenous banks but help them to grow. The process is not to eliminate any bank. Government appreciates the fact that there is a spectrum of small, medium and large banks. As such, any policy measures should take that into account,” Moyo said.
“We are not going to pamper you (indigenous banks), don’t be too comfortable being small,” the acting minister said.
Gono said the central bank regulations will be implemented in phases allowing financial institutions ample time to comply.
“Allow me to take this opportunity to invite you all to approach the central bank, (and indeed my office stands ready to provide assistance to any institution experiencing conceptual difficulties) with any proposal or ideas which you think might help you in the realisation of your goal,” he said.
Added Gono: “I wish to express my profound and heart-felt appreciation to all those who have so far offered their supportive and opposing expert opinion, and varied views, on the subject of bank capital in general and in particular, in the Zimbabwean context.
“Assuredly, we will amalgamate all the expert views and opinions proffered to inform debate on this pertinent subject.”
“This wealth of information will form part of our library reference material which will remain at our disposal as we craft future policies for the banking sector and the economy at large. I also wish, at the outset to thank the President, Cde R G Mugabe, vice presidents J T R Mujuru and J L Nkomo, Prime Minister Hon Mr Tsvangirai and deputy prime ministers Prof A O Mutambara and T Khupe, minister of Finance Hon T Biti.”
The new requirements are valid to both commercial and merchant banks, whose thresholds were pegged at $12,5 million and $10 million, respectively.
Building societies, on the other hand, will now be expected to have $80 million, finance and discount houses $60 million with micro-finance institutions now required to have $5 million from the current $1 million.
According to the RBZ, all banks will be expected to have at least 25 percent of the new prescribed levels by December this year, 50 percent by June 2013, 75 percent by December that year and 100 percent of that prescribed rate by June 2014.
Zimbabwe currently has 25 registered financial institutions, with two having been closed and another one, Interfin Bank Limited currently under curatorship.