RBZ moves to ease liquidity constraints

via RBZ moves to ease liquidity constraints – The Standard December 22, 2013

THE Reserve Bank of Zimbabwe (RBZ) has moved to ease the liquidity constraints by directing stronger banks to bailout their struggling compatriots.

The move comes at a time depositors have been failing to get their money from two banks — Metbank and Allied — raising fears the setback would dampen the depositors’ festive season mood.

Under the bailout plan, the two banks would get loans from stronger banks on terms negotiated by the central bank.

The terms of the loans and identities of the banks that had provided the loans could not be obtained last week.

The bailout could come as relief to the two institutions that have borne the brunt of pacifying angry depositors.

On Monday, depositors of Allied Bank (formerly ZABG) turned riotous and smashed door glasses after failing to access cash at one of the bank’s branches.

Last month a branch manager of Metbank in Mutare had to seek refuge at a police station as depositors threatened to beat him up after failing to access their money.

Banking executives said pressure on banks was an annual occurrence especially in the last quarter of the year and the institutions should build adequate stocks.

However, executives said this year was different as banks suffered a run on deposits a week before and after the July 31 elections. It is estimated that at least US$1 billion could have left the formal banking sector.

The banking sector has also suffered from the absence of a functioning inter-bank market, meaning that surplus positions at some banking institutions remain unavailable to deal with shortages at others.

In his 2014 National Budget, Finance minister Patrick Chinamasa said government had mobilised a US$100 million interbank programme guaranteed by the African Export-Import Bank effective April 1