Trust Bank fails to pay depositors

A LIQUIDITY crisis affecting the country's financial system began to bite yesterday after hundreds of Trust Bank depositors in Bulawayo failed to access their money.

Some restless depositors - a majority of them civil servants and council workers - spent the entire day in queues but still could not withdraw their cash, the chronicle reported.

"I was the first person in the queue at 9am, now it's 3pm and I still don't have my money. The officials at this bank are failing to explain what is happening," fumed one Trust Bank customer, who declined to be named.

A group of the bank's customers, mainly teachers from different city schools, visited the Chronicle newsroom and accused the bank of taking them for granted.

"We were supposed to get our money yesterday and today there is still no satisfactory explanation from the bank," said one female teacher.

"Their machines reflect that the money was deposited, but we cannot withdraw it."

Another teacher said she suspected that the bank diverted their money and was now playing hide and seek.

"The behaviour of this bank is worrying. With our bonus coming, I'm not sure if we will get our money. These people are cheating us," she blasted.

"From the time I spent at the bank, only four people withdrew their money after a handful of people made deposits."

Economists warn that the banking system could soon "grind to a halt" if urgent interventions are not made to capitalise the Reserve Bank of Zimbabwe and restore its role as lender of last resort.

The liquidity crisis, which has been months in the making, was experienced in 2008 but eased following the formation of a power sharing government a year later.

But a fiercely fought election campaign in July appears to have ushered in a new period of investor fright which shows no signs of abetting, months after the election.

One banking official explained: "The liquidity crunch also has to do with pre-and post-election pressure that has been bearing on the banking sector.

"In the run-up to elections, investors were not sure of the outcome of the elections and anticipated violence and disputes, while in the post-election phase, some people in the business community did not get the results that they wanted and either externalised funds or held on to their savings."

An executive with one of the locally-owned banks told Chronicle that the crisis was being driven by an imbalance between imports and exports which had seen money leaving the country.

"We've a trade deficit. Everything you are buying is imported - your fuel, electricity and even tissues. Zimbabwe as a country is not exporting as much as it is importing.

"So what you have is a situation where money - which is supposed to circulate thereby creating liquidity - is in fact leaving the country.

"For liquidity to occur, you must have large amounts of money coming into the country.

"Before, we had donor funds and lines of credit from international financial institutions, but these have dried up and the money system is slowly grinding to a halt."

Finance Minister Patrick Chinamasa is set to unveil his 2014 budget in December, and economists say he must prioritise attracting "new money" in the form of foreign direct investment and stimulating the productive sectors to boost exports.