Cash levels decline in bank vaults

Source: Cash levels decline in bank vaults – The Standard October 22, 2017

SMALL money bags have become the new way of carrying cash in Zimbabwe as most banks only have coins to disburse to depositors.
So depressed has the cash situation become that 21st century Zimbabwe now resembles the Roman era of 753BC and 476AD where money was in the form of coins only.


During that forgotten era, traders or tax collectors carried cash in money bags. Standardbusiness last week went out to carry out a survey on the cash situation in the country and established that the country is facing a dire cash shortage.

Several banks, including CBZ Bank, which are now giving depositors only coins, said they have suffered a serious shortage of cash, especially notes, from as early as June.

In its report, the parent company CBZ Holdings reported that its banking division increased their active depositor base by 11,17% to 408 000 from the end of 2016, yet this was not enough to reach optimum cash levels.

“We are quite blessed to have clients who have been supporting us despite the fact that they may not get as much money as they would have wanted; they still want to be loyal to the bank,” CBZ Holdings CEO Never Nyemudzo said.

“Our thrust is to continue to deploy more of these e-platforms so that the issue of cash can become less and less but again, when you deploy these e-platforms you also have to deal with the issues of cost.”

Part of the plan is to move depositors onto e-platforms, including introducing self-service mechanisms in its banking halls, such as WiFi hotspots and encouraging the usage of their mobile application, CBZ Touch.

The key to having depositors use more of these cashless platforms, Nyemudzo said, was to make them “free of charge”.

Either way, CBZ Bank may not have a choice in the matter because as at the end of June, the group reported having cash of $8,86 million and $1,9 million in nostro accounts down by 5,97% and 89,89% respectively from the end of the 2016.

Ideally, a bank should have between 40 to 50% hard cash to support deposits, yet looking at CBZ Holdings deposits of $1,82 billion against available cash and nostros, it is way below the required levels.

This is why analysts say they could be compensating for the difference by holding onto treasury bills (TBs) with a stock of $814,5 million at the end of June.

Currently, CBZ Bank is engaged in a deposit mobilisation programme to increase their cash stock.

Another institution with a large depositor base, CABS, also reported that they had very low levels of cash in their vaults at the end of the half year.

Like CBZ Bank, CABS is also disbursing coins in plastic paper bags to clients due to low levels of cash.

As at August, CABS reported having over 300 000 depositors , which was up from the prior period but still only had under $4 million cash in their bank vaults.

“It [cash level] is still very low, as we have seen across the economy we are sitting at under $4 million in cash. Nostro balances fluctuate with export proceeds or if we are building up to make a repayment of a line of credit, but it is also very low. We continue to have a queue of people trying make foreign payments as I think all the banks do so that has remained tight,” managing director Simon Hammond said.

Asked how he would get CABS to deal with that problem, Hammond spoke of e-platforms.

“We have 12 000 point of sale machines out in the market and we have been the market leader for many years. We are rolling them out at a rate of about 1 000 per month. We have just revamped our mobile application to make it a lot more user friendly and quicker. This will enable the great majority of people to make payments either on the mobile application or the simpler USSD [Unstructured Supplementary Service Data],” he said.

Other e-platforms include internet banking.

“Obviously, everyone is frustrated at the moment on our side that we cannot provide and on the customer’s side that they cannot get access to the cash that they were used to previously and particularly the foreign currency to import goods and services. But, in terms of providing new products and new ways of doing business digitally, we continue to develop the whole time,” he said.

At the end of the half year ending June 30, CABS had $3,06 million and registered the steepest drop of nearly 70% in cash out of all the banks.

In the comparative period in 2016, CABS had $10,07 million cash in its bank vaults.

Yet, looking at their deposits, CABS reported an increase to $855,69 million from $768,08 million recorded in the comparable period last year.

As such, CABS is also not adequately supporting the cash in their books but could be making it up by through TBs which went up by 48,8% to $131,57 million.

What causes all these declines is the fact that depositors (individual or company) have lost confidence in the financial institutions.

For example, Stanbic Bank a member of the Standard Banking Group headquartered in South Africa, reported having bank notes worth $4,9 million at the end of the half year ending June 30.

This was down 54,98% from $10,88 million recorded at the end of 2016.

Yet, deposits from customers over the same period increased by 26,1% to $883,64 million, which again shows the major disconnect.
Another foreign bank, Standard Chartered Zimbabwe, reported at the end of June that the levels of cash and balances with banks dropped by 54,4% to $19,14 million from the same period last year.

This is despite having grown deposits from customers by nearly 50% to $510,46 million at the end of June from the 2016 comparative.

Another bank, Botswana headquartered African Banking Corporation Zimbabwe Limited (BancABC), also had low cash in their vaults at the end of June.

Though the bank grew their cash on hand by nearly three quarters at the end of the comparative period in 2016, they reported only having $6,54 million cash on hand at the end of June 2017.

In terms of deposits, it registered a 23,92% increase to $351,4 million in the period under review and as such, grew its TBs stock to $8,82 million from a 2016 comparative of $1,7 million.

Local bank, FBC Bank, reported having notes and coins amounting to $5,15 million at the end of June, which was down from the 2016 comparative of $6,9 million.

The overall impression from this exercise was that cash in these bank vaults is fast running out and banks will continue to distribute the Roman Era money bags of coins.