Standard Chartered, Barclays defy RBZ

THE Reserve Bank has turned down applications by Standard Chartered Bank and Barclays Bank to keep over 25 percent of their Nostro account balances offshore as it emerged yesterday that some banks had partially complied with the directive to transfer 75 percent of their funds to onshore accounts.

RBZ Governor Dr Gideon Gono yesterday said the central bank will descend heavily on the truant banks.

Statistics show that Nostro balances for 22 banks stood at US$312, 6 million as of yesterday, instead of US$230 million had all the banks heeded the RBZ directive.

At least US$82 million was outstanding as of yesterday.

"The Reserve Bank of Zimbabwe shall be meeting with banks that have not complied with a view to taking stern measures to ensure compliance," Dr Gono said last night.

Figures showed that as of yesterday, Standard Chartered had US$109, 3 million as its Nostro balance, instead of keeping US$28,4 million as per the new requirements.

The variance, therefore, stood at US$81 million.

The bank had its request for a dispensation to keep funds in excess of the 25 percent requirement turned down by the central bank.

Standard Chartered said it needed to keep the funds offshore to facilitate disbursements to clients.

Barclays had a Nostro balance of US$37,4 million as of yesterday, but had not complied.

It had a variance of $16,4 million.

The bank had also applied to keep the funds offshore, saying they were for loan facilities. Its request for a reprieve was also thrown out.

"Banks with large amounts in Nostro balances have submitted applications for dispensations to keep funds offshore to meet future obligations.

"In light of these dispensations, the Reserve Bank of Zimbabwe has declined or approved some of the applications," said Dr Gono.

Stanbic Bank was given a reprieve as the bulk of its Nostro account funds were earmarked to pay a USS$50 million Zesa debt on April 1 while US$20 million was committed towards a Youth Fund to be launched next week.

An additional US$10 million had been set aside for a client.

MBCA, which had a Nostro account balance of US$53,5 million successfully applied to keep a higher than stipulated percentage offshore saying it would be compliant as from March 12.

ZB Bank, with a Nostro balance of US$15,6 million as of yesterday, could also not comply because US$3,8 million was blocked under the Zimbabwe Democracy and Economic Recovery Act (Zidera) enacted by the US Government as part of its sanctions regime against the country.

FBC Bank, with an offshore account balance of US$17,9 million as of yesterday, could also not comply because it had transferred US$14 million offshore to cater for cash imports.

Indications last night were that the rest of the banking sector was within the stipulated limits or were, in most cases, carrying Nostro balances that were lower than the 25 percent threshold.

The central bank directed that with effect from March 1, all banks were required to maintain a maximum of 25 percent of their Foreign Currency Account balances offshore to meet their daily international payment obligations while the balance would be transferred to onshore accounts.

This measure was meant to improve liquidity.

It has emerged that some banks are not comfortable with the directive and have sought reprieve for one reason or the other.

Zimbabwe is in dire need of funds to finance the productive sector. Excess balances in Nostro accounts are seen as a source of some of the funds required to boost activity in the productive sectors.

Available lines of credit have failed to meet demand for funds as companies seek working capital and funds for recapitalisation.

Last night, Dr Gono said the 25 percent threshold will be increased to 30 percent from June 30.

The Nostro balances will continue to be eligible for liquid asset ratio requirements.

Furthermore, all cash repatriations to fund Nostro balances will be processed in line with the 25 percent threshold, a regulation that will not apply in cases where soiled currency notes were being exported.