Mugabe asked to stop Barclays sale

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HARARE – The Zimbabwe Monetary Institute (ZMI) has asked President Robert Mugabe and Indigenisation minister Patrick Zhuwao to stop Barclays’ sale of its Zimbabwe bank to Malawi-listed First Merchant Bank (FMB).


The sell is part of the British lender’s broader exit from Africa to refocus on the United States and Britain.


According to the deal hammered out by a team of lawyers, including London’s Norton Rose and Addington Chinake of Kantor & Immerman, FMB will hold a 42 percent stake, Barclays 10 percent until 2020 and other sitting shareholders will retain their 33 percent.


This comes as all 700 Barclays Bank of Zimbabwe employees — set to transfer to the new owner — were also moving to lobby government to block the bank’s takeover by Malawi’s FMB, amid reports that management’s bid, led by Barclays Zimbabwe managing director George Guvamatanga,  had support of the State pension fund National Social Security Authority (Nssa).


The deal is expected to complete in the third quarter of this year.


The ZMI said in its letter to Zhuwao, also copied to Mugabe and the deputy governor of the Reserve Bank of Zimbabwe Kupukile Mlambo, that money creation in Zimbabwe was a sovereign right and no foreign-owned companies or foreign-controlled companies should exercise it.


“We understand that Barclays Bank plc is going to dispose of its shareholding in its Zimbabwean subsidiary.


“We wish to state our position, as regards foreign-owned and foreign-controlled commercial banks; foreign-owned banks and foreign-controlled banks should not be entitled to create money in Zimbabwe,” Farai Pasipanodya, the director of the ZMI said in the letter.


“Every time the banks lend, they create money that has not existed before.


“They do not wait for someone to deposit money before they can lend. They actually create new money each time they lend.”


Barclays did not announce a price but said the deal would remove $375,69 million in risk-weighted assets from its balance sheet.


The ZMI said government should legislate that foreign banks, or even all banks, should limit their lending to moneys deposited by customers and to those invested by shareholders.


Under Zimbabwe’s Indigenisation and Economic Empowerment Act, all foreign companies were supposed to sell at least 51 percent of their holdings by March 31 last year, part of Mugabe’s black empowerment drive, but they failed to comply with the deadline to transfer majority shares to locals.


Foreign banks in Zimbabwe include Barclays Plc, Standard Chartered Plc and South Africa’s Stanbic Bank Ltd.


ZMI called for nationalisation of money creation.


“We will go further and state that the bank creation of money should be indigenised to such an extent that we recommend that it be nationalised,” Pasipanodya said.


This was after Barclays  early this month announced a decision to end its 105-year presence in Zimbabwe by agreeing to sell its operations in the cash-starved African country to the Malawi-listed lender.


First Merchant Bank already has stakes in Capital Bank in Mozambique and Botswana and First Capital Bank in Zambia. But this is its first investment in Zimbabwe.


The agreement came days after Barclays said it had cut its stake in its main African operation from 50 percent to 15 percent, selling control of the Johannesburg-listed business, which has always remained separate from the UK bank’s Zimbabwe business.


Barclays first established a presence in Zimbabwe when it was still a British colony in 1912. It is selling its two-thirds stake in Barclays Bank of Zimbabwe, which is listed in its home country with a market capitalisation of $73 million.


The deal means Standard Chartered is the only western bank left in Zimbabwe, which is grappling with a severe dollar shortage and political uncertainty over Mugabe, the 93-year-old president, ahead of next year’s election.


Barclays Bank of Zimbabwe, which has $476 million of total assets and made $10.9m of net profit last year, is a similar size to First Merchant Bank, which has $450 million in assets and made $10 million of profit last year.

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