VENTURES AFRICA – Top South African banks that have operations in the neighbouring Zimbabwe face stringent regulation into lending and deposit fees they charge.
On Friday, Zimbabwe’s Finance Minister, Tendai Biti, promised to come down hard on banks by working towards a regulated lending and deposit rates regime.
This will no doubt affect South African banks that have operations in Zimbabwe.
Top four South African banks – Standard Bank, Absa, FirstRand and Nedbank – have operations in the neighbouring Zimbabwe.
These top South African banks are among the most expensive banks in the world, according to a couple of surveys that have been conducted in South Africa.
This even prompted a commission of enquiry into bank charges in South Africa.
But the recommendations of the Jali Commission have not been fully implemented and from time to time complaints of high bank charges are lodged against South Africa top four banks.
It is therefore obvious that these banks also do the same in African countries where they have operations.
South African banks have identified the entire African continent as a growth area and most of them have an African strategy of some sort.
Standard Bank, Africa’s biggest bank by assets, has a presence in 18 African countries.
Absa, South Africa’s biggest retail bank is closer to acquiring all the African banking assets of its parent company Barclays.
First Rand, South Africa’s third biggest bank by market value, recently embarked on an Africa intensive strategy and is planning to capitalise on the India-Africa corridor.
Nedbank, South Africa’s fourth biggest bank by market value, has a partnership with West Africa’s banking giant, Ecobank.
Biti, speaking during his 2013 budget speech, proposed that banks pay a minimum interest rate of 4% per annum for all term deposits from a minimum of $1 000 for 30 days.
Media reports said currently most Zimbabwean banks are not paying interest rates on savings and current account deposits.
Biti also proposed that there should be no bank charges for all deposits of less than $800.
On lending rates, he said banks will not be allowed to charge more than 10% interest rates on loans.
“The Central Bank and the Bankers Association of Zimbabwe will sit together and craft a memorandum of understanding on the manner in which the lending rates will be defined,” he said, adding that banks will also take into account the cost of money.
The memorandum of association will then be converted into a statutory instrument.
Biti said Old Mutual and the National Social and Security Authority (NSSA) had agreed that their local bank deposits, which constitute 40% of the country’s deposits, be loaned out at 10% at bank level.
The two institutions and the banks will then agree on how best to share the 10 percent interest.
Currently lending rates in Zimbabwe range between 15-30 percent.