By IOL News

The Zimbabwean central bank said three local banks – Standard Chartered, Time Bank and ZB Building Society – were inadequately capitalized during the period under review.

“Standard Chartered Bank’s compliance will be addressed through the acquisition of the banking institution by FBC Holdings Limited (FBCH), which is currently being finalised. ZB Building Society capitalisation is also dependent on the outcome of the current strategic initiatives within the Group,” said central bank governor, John Mangudya.

Time Bank had been permitted to gradually meet the prescribed minimum capital requirements in terms of its strategy which provides for a phased approach to conduct banking activities in line with the central bank’s decision to allow it to recommence banking operations.

Zimbabwean banks have been struggling for foreign currency liquidity in a hyperinflationary environment although they are now able to deal in foreign currency on a willing seller willing buyer basis.

Most of the Zimbabwean banks – among them units of Nedbank, Standard Bank and Ecobank – are having to institute capital preservation strategies such as investment into gold coins, investment into property sector, lending in US dollars, as well as maintaining a portion of their capital in US dollars to preserve capital.

This comes as foreign currency deposits at 80% of total deposits have outstripped local currency holdings. Zimbabwe’s economy is increasingly dollarising, with remittances playing a key role in sustaining households and cushioning them from rampant inflation.