Global banks shun 'high risk' Zimbabwe

Global banks shun 'high risk' Zimbabwe
Published: 02 February 2018 (677 Views)
Zimbabwe has over the past few years lost 102 correspondent banking relationships due to high country risk, Reserve Bank of Zimbabwe Governor Dr John Mangudya said.

Correspondent banking represents the cornerstone of the global payment system designed to facilitate the settlement of cross border financial transactions. The development has left Zimbabwean financial institutions struggling to access the global financial systems and as a result, many banks are forced to use third parties to transact.

Addressing a lunch hosted by the Swiss Business Circle in Zurich, Switzerland last week, the central bank governor described how Zimbabwe had been shunned by reputable international banks as he appealed for restoration of the critical relationships.

"We need the foreign banks to stop de-risking Zimbabwe," said Dr Mangudya. "The country has gone through de-risking phase over the past 10 years. We have lost 102 correspondent banking relationships because Zimbabwe was seen as a high risk country. "We know it, we suffered it that is why we are saying we are now open for business."

Dr Mangudya was part of the Zimbabwean delegation at the recently held World Economic Forum in Davos where President Mnangagwa told the international investor community that Zimbabwe was open for business. President Mnangagwa also assured potential investors that their investments would be safe under his administration.

Economic analysts said the Government needs to continue pursuing and implementing policies to restore confidence and ensure the country was "seen in positive light".

This is critical because risk is a perception," Oxlink managing director Mr Brains Muchemwa told Business Weekly.

"So Government needs to continue with the efforts to engage the international community and reform regulations and policies (that made investors and foreigners uncomfortable dealing with Zimbabwe) so that the country is seen in positive light.

"If you lose correspondent banking relationships, it becomes difficult to execute international payments.

"It (de-risking) is also aligned with challenges of accessing lines of credit. It is a sign that you have elevated perceived country risk. De-risking means you lose efficiency in international payments."

Muchemwa said the small steps the Government was taking in improving ease of doing business through addressing foreign investors' concerns would go a long way in reducing perceived country risk.

Zimbabwe's high risk profile was also worsened by imposition of sanctions by the west.

For instance, ZB Financial Holdings last year said it managed to regain use of most of its foreign correspondent banking accounts since its removal from the US sanctions list in October 2016. The US Treasury, through its Office of Foreign Assets Control (OFAC) had imposed restrictions on the bank as part of a wider sanctions campaign against Zimbabwe.

A June 2016 International Monetary Fund (IMF) Discussion Note titled 'The Withdrawal of Correspondent Banking Relationships: A Case for Policy Action' highlights the fact that foreign correspondent banking can be lost due to several factors:

"Banks are required to comply with economic and trade sanctions, AML/CFT requirements, and anti-bribery and tax evasion regulations applicable in the jurisdiction(s) in which they operate, as well as with those in their home jurisdictions.

"Compliance with regulatory requirements in these areas involves the implementation of internal controls, including customer due diligence, transaction monitoring, record keeping, and reporting of suspicious transactions. The effective implementation of these procedures may be leading banks to terminate CBRs to comply with targeted financial sanctions, or if there is a reason to believe that the respondent bank is involved in money laundering, terrorist financing, or other fraudulent activities."

- Business Weekly

 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Centre for Investigative Journalism established in Zimbabwe

by Byo24News Reporter | 22 May 2018 | 38 Views

MRP President summoned by Matobo youths

by Stephen Jakes | 22 May 2018 | 50 Views

'I'm not Chamisa's side chick'

by Staff reporter | 22 May 2018 | 110 Views

WATCH: Khupe hure chants by Chamisa's supporters

by youtube | 22 May 2018 | 124 Views

'Zimbabwe owes peace to the military'

by Staff reporter | 22 May 2018 | 56 Views

Fuel shortages remain unchanged

by Staff reporter | 22 May 2018 | 51 Views

MDC-T Chamisa in trouble

by Staff reporter | 22 May 2018 | 69 Views

Police keen to interview Kasukuwere

by Byo24News Reporter | 22 May 2018 | 93 Views

The mystery of the Pay-For-Your-House scheme

by Tondorindo Murisa | 22 May 2018 | 48 Views

Mliswa met Kasukuwere in exile

by A Mhlongo | 22 May 2018 | 124 Views

WATCH: Kasukuwere returns

by Staff Reporter | 22 May 2018 | 112 Views

'Chamisa doesn't want elections'

by Tafadzwa Masango | 22 May 2018 | 88 Views

American TV partners Zimbabwe artistes

by Staff reporter | 22 May 2018 | 46 Views

Zanu-PF, MDC-T in same violence WhatsApp group

by Staff reporter | 22 May 2018 | 55 Views

Zanu-PF aspiring MP appoint rivals as campaign managers

by Staff reporter | 22 May 2018 | 49 Views

Chamisa, Majome trying to kiss and make up

by Staff reporter | 22 May 2018 | 75 Views

Chamisa postpones Harare, Chitungwiza primaries

by Staff reporter | 22 May 2018 | 46 Views

ZANU PF pointed as the leading perpatrator of violence

by A Mhlongo | 22 May 2018 | 46 Views

BREAKING: Chamisa wins court case against Khupe

by A Mhlongo | 22 May 2018 | 116 Views

Mnangagwa shows determination to fight corruption

by Joice Tsitsi | 22 May 2018 | 47 Views

ZEC website susceptible to hacking

by Staff reporter | 22 May 2018 | 45 Views

Kasukuwere arrested?

by Staff reporter | 22 May 2018 | 134 Views

Bulawayo-Nkayi road's ingwigwizi Bridge construction kicks off

by Staff reporter | 22 May 2018 | 41 Views

EXPOSED: Grace Mugabe funding the NPF project

by Staff reporter | 22 May 2018 | 169 Views

Zapu Firebrand Moyo lights up Zapu Europe AGM

by Samkelo Nkomo | 22 May 2018 | 69 Views

Mugabe to spill the $15bn beans in Parly tomorrow?

by Staff reporter | 22 May 2018 | 125 Views

Mliswa meets Kasukuwere in exile

by A Mhlongo | 22 May 2018 | 177 Views

Mnangagwa usurping NPA powers - analyst

by Staff reporter | 22 May 2018 | 86 Views

Zanu-PF MP dies

by Byo24News Reporter | 22 May 2018 | 137 Views

Zim must now show commitment to Commonwealth values of democracy

by Staff rpeorter | 22 May 2018 | 118 Views

ZEC idiots mutilating isiNdebele

by Staf reporter | 22 May 2018 | 118 Views

Mnangagwa aims to move Zimbabwe from pariah to global partner

by Staff reporter | 22 May 2018 | 93 Views

Chamisa resumes Matebeleland rallies

by Staff reporter | 22 May 2018 | 106 Views

Tutani refuse to apologise, CEO Makekera resigns

by Staff reporter | 22 May 2018 | 114 Views