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Old Mutual rallies re-engagement efforts

05 Sep 2021 at 05:53hrs | Views
FINANCIAL services provider, Old Mutual Holdings has implored relevant authorities to continue with international re-engagement efforts to attain healthier relations with international financial markets which are central to smooth banking operations.

Zimbabwe financial service companies have been operating at minimal level due to barriers induced by the Zimbabwe Democracy and Economic Recovery Act (ZIDERA) of 2001 and the United States' Office of Foreign Assets Control, which restricts the movement of money owned by firms under United States illegal sanctions.

Resultantly, Zimbabwe relies heavily on correspondent banks to gain access to foreign financial markets and to serve international clients due to the uncomplimentary relations it has with some western countries.

According to the Reserve Bank of Zimbabwe (RBZ) at least 102 correspondent banking relationships have been lost over the last decade due to the country's alleged high-risk status due to sanctions.

Correspondent banks are financial institutions that provide services to another one usually in another country. They act as intermediaries or agents that facilitate wire transfers, conducting business transactions, accepting deposits and gathering documents on behalf of another bank.

In a strong way, OFAC regulations have led many international banks to be hesitant when dealing with Zimbabwe while some have cut off ties completely.

In 2019 Standard Chartered Bank was instructed to pay a fine worth US$18 million by the Office of Foreign Assets Control (OFAC) to the US government for violating Zimbabwe Sanctions Regulations (ZSR) by handling transactions for state-owned firms and sanctioned individuals worth close to US$77 million.

Just recently German-based DEUTSCHE Bank reportedly curtailed its correspondent banking ties with Stanbic Bank, one of the few remaining international banking providers operating in Zimbabwe triggering a major setback to the institution and its clientele at large.

To avoid upsetting the US Treasury, in 2016 Standard Chartered Instructed Industrial Development Corporation (IDC) to close its accounts with the bank.

Barclays (now First Capital) was instructed to pay a US$2,5 million settlement to the US Treasury after handling IDC (and its subsidiaries) transactions worth US$3,4 million between 2008 and 2013.

In 2017 CBZ was given a tough run by OFAC after it carried out transactions on behalf of sanctioned ZB bank, imposing a penalty of US$385 million.

While presenting the half-year results to June 2021, Old Mutual Zimbabwe group chief executive officer Samuel Matsekete noted that improved relations with the international community would set right the restricted access to funds by local financial services companies.

"Efforts to continue to engage international community remains very important. We believe that we still have a financial services industry that can benefit from amicable relations with international markets which would allow us to establish relationships much more easily as well as ensure that we can sustain financing arrangements into our markets here locally," said Mr Matsekete.

Source - sundaymail
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