Biti plans to force banks to merge

THE Zimbabwean government is considering legislation to force bank mergers to reduce the number of financial service institutions in the country and help ensure the sector's stability, Finance Minister Tendai Biti has said.

Biti told the parliament's committee on budget, finance and investment Promotion that the country had too many banks adding several barely met minimum capital requirements thereby threatening sector-wide contagion.

Zimbabwe had 23 banks in the country but some balances are not good and Biti wants 10 or six strong banks.

Biti said his ministry has mandated the Reserve Bank of Zimbabwe Governor to enter into dialogue with the banks to consider mergers, he reiterated that they (ministry) will force anyone.

Central bank governor, Gideon Gono also warned that a pending increase in minimum capital requirements means that banks barely meeting the threshold must consider merging with better capitalised institutions.

According to last month's monetary policy statement, Zimbabwe has 17 commercial banks, four merchant banks, four building societies and one savings bank.

Gono said all but four institutions were adequately capitalised while those falling short had submitted compliance proposals.