Zimbabwe’s fragile banking sector was hit by bad omens on Thursday night after Allied Bank – controlled by Transport Minister Obert Mpofu – gave up its licence to the central bank and Kwanele Ngwenya, the South African CEO of Steward Bank, said he would not be renewing his contract at the end of this month. Despite repeated statements by the government and the central bank that the Zimbabwean banking industry is safe, there have been signs of strife among the locally owned banks. Some of them have been unable to meet daily demand for cash from depositors, prompting calls for mergers and amalgamations to help the local finance institutions shore up their capital bases and capacity.
Local banks such as Interfin and Genesis, said to have been partly owned by Environment Minister Saviour Kasukuwere, have folded in the past two years. Experts have called on the Reserve Bank of Zimbabwe (RBZ) to clean up the banking sector “to protect depositors” from shaky banks. The Zimbabwean central bank said on Thursday afternoon that Allied Bank’s licence had been cancelled following “a voluntary surrender of the licence by the banking institution”.
In 2014, the central bank said it was closely monitoring about seven banks, including Allied Bank, to determine their stability. “The Reserve Bank has determined that the banking institution is no longer in a safe and sound condition in that the institution is grossly undercapitalised and is facing chronic liquidity challenges,” said the central bank. Steward Bank, the banking unit of Strive Masiyiwa’s Econet Wireless, was also hit on Thursday by news that its South African chief executive officer, Kwanele Ngwenya, will not renew his contract which expires at the end of this month. Steward Bank was established after Masiyiwa bought out former Econet chairperson Tawanda Nyambirai’s controlling interest in TN Bank.
“The Board of Directors of Steward Bank announced yesterday (Thursday) that Kwanele Ngwenya has indicated his desire not to renew his contract as Chief Executive Officer. Ngwenya will step down from his position at the expiry of his contract on January 31, 2015,” board chairperson Tomisin Fashina said on Thursday evening. Steward Bank is an important cog in Masiyiwa’s bid to entrench Econet Wireless’ dominance and relevance in the Zimbabwean economy as telecommunications companies broaden into overlay and value added services. It holds the mobile money licence for various initiatives under the leading telco giant’s EcoCash mobile money platform, which now has over 3 million users. It was not immediately clear why Ngwenya, who has previously been a banking executive in Botswana, had decided to step down. Steward Bank however said it will appoint an unnamed executive to lead the company in an interim capacity, pending the replacement of Ngwenya.
Interestingly, foreign-owned banks – such as Barclays, Standard Chartered, MBCA and Stanbic – are the ones that are stable. They have however been facing intensifying calls from President Robert Mugabe’s government to give up majority shares into the hands of black Zimbabwean groups under the controversial empowerment policy.