Business / Economy
'Interbank market now operational,' says RBZ
11 Feb 2015 at 11:58hrs | Views
Local banks' ability to extend liquidity reprieve to each other has been enhanced following the full operationalisation of the interbank market.
Besides ensuring stability of the financial sector in the event of a temporary liquidity glitch, the interbank market ensures efficient allocation of financial resources.
Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya announced in his Monetary Policy Statement (MPS) of 2015 that the local interbank market was now in operation, describing it as a "great financial milestone."
"The interbank facility supported by the African Export-Import Bank (Afreximbank) under the Afreximbank Trade Debt Backed Securities (AFTRADES) is now operational. This is a great financial milestone," said Dr Mangudya.
"The facility would be managed by the Reserve Bank as an agent bank for Afreximbank for the purposes of managing the surplus and deficit participants' requirements under AFTRADES.
"The initial borrowers under AFTRADES have already been assessed and approved by Afreximbank. Lending to these approved banks would be strictly against acceptable collateral." The surplus banks' risk under AFTRADES would be transferred offshore to Afreximbank.
The country's interbank market was made dysfunctional upon the introduction of the multicurrency system as confidence in the banking sector waned.
To the extent that the interbank market will ease tight liquidity in the financial services sector, it is also expected that prevailing high interest rates should begin to level off if anchored by a well-capitalised central bank.
The RBZ governor said the (interbank) "facility shall also be used as a precursor programme for the lender of last resort function by the Reserve Bank."
Capitalisation on the rise Figures in the MPS have also shown a sector gradually getting back to its feet, although the issue of the six "ill" banks is yet to be addressed. On aggregate, the banking sector's core capital increased from $790,4 million as at 31 December 2013 to $811,2 million as at 31 December 2014, on the back of improved profitability.
Dr Mangudya said the banking sector remains profitable, after posting an aggregate net profit of $52,8 million for the year just ended. This was a 1633 percent growth from the $3,4 million reported in the prior year. But six banks were yet to comply with the prescribed minimum core capital requirements as at 31 December 2014.
CBZ Bank is currently the only institution to have surpassed the $100 million minimum capital requirement (with a core capital of $109 million) for the Tier 1 strategic group which is effective in 2020. And four banks - CABS ($92,8 million); Stanbic ($79,7 million); BancABC ($63,3 million), and Standard Chartered ($61,9 million) and have capital levels above $50 million.
Besides ensuring stability of the financial sector in the event of a temporary liquidity glitch, the interbank market ensures efficient allocation of financial resources.
Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya announced in his Monetary Policy Statement (MPS) of 2015 that the local interbank market was now in operation, describing it as a "great financial milestone."
"The interbank facility supported by the African Export-Import Bank (Afreximbank) under the Afreximbank Trade Debt Backed Securities (AFTRADES) is now operational. This is a great financial milestone," said Dr Mangudya.
"The facility would be managed by the Reserve Bank as an agent bank for Afreximbank for the purposes of managing the surplus and deficit participants' requirements under AFTRADES.
"The initial borrowers under AFTRADES have already been assessed and approved by Afreximbank. Lending to these approved banks would be strictly against acceptable collateral." The surplus banks' risk under AFTRADES would be transferred offshore to Afreximbank.
To the extent that the interbank market will ease tight liquidity in the financial services sector, it is also expected that prevailing high interest rates should begin to level off if anchored by a well-capitalised central bank.
The RBZ governor said the (interbank) "facility shall also be used as a precursor programme for the lender of last resort function by the Reserve Bank."
Capitalisation on the rise Figures in the MPS have also shown a sector gradually getting back to its feet, although the issue of the six "ill" banks is yet to be addressed. On aggregate, the banking sector's core capital increased from $790,4 million as at 31 December 2013 to $811,2 million as at 31 December 2014, on the back of improved profitability.
Dr Mangudya said the banking sector remains profitable, after posting an aggregate net profit of $52,8 million for the year just ended. This was a 1633 percent growth from the $3,4 million reported in the prior year. But six banks were yet to comply with the prescribed minimum core capital requirements as at 31 December 2014.
CBZ Bank is currently the only institution to have surpassed the $100 million minimum capital requirement (with a core capital of $109 million) for the Tier 1 strategic group which is effective in 2020. And four banks - CABS ($92,8 million); Stanbic ($79,7 million); BancABC ($63,3 million), and Standard Chartered ($61,9 million) and have capital levels above $50 million.
Source - bh24
