Fin24

Zim laws: Minimal impact for SA banks

2012-12-05 14:48

Johannesburg - Zimbabwe’s operations of local banks were quite small and any policies introduced by that country’s politicians would not have a negative impact on SA banks, a Johannesburg-based analyst said on Tuesday.

Tom Winterboer, a banking analyst at PwC, said statements by Zimbabwean politicians recently would not negatively impact South African banks by a big margin “because our banks are not big in that country”.

His comments follow reports last week that top South African banks with operations in the neighbouring country could face stringent regulation into lending and deposit fees they charge.

Late last week, Zimbabwe’s Finance Minister Tendai Biti, promised to come down hard on banks by working towards a regulated lending and deposit rates regime.

Analysts responded that this would no doubt affect South African banks that operate in Zimbabwe.

Four of South Africa's top banks – Standard Bank, Absa Group [JSE:ASA], FirstRand and Nedbank Group [JSE:NED] – all have operations in Zimbabwe.

South African banks are among the most expensive in the world, according to recent surveys and which prompted a commission of enquiry into local bank charges.

But the recommendations of the Jali Commission have not been fully implemented and from time to time complaints of high bank charges are still lodged.

Zimbabwe fears that South African banks could be doing the same there and elsewhere in the continent.

South African banks have identified the entire African continent as a growth area and most of them have African strategies in place.

Standard Bank Group [JSE:SBK], Africa’s biggest bank by assets, has a presence in 18 African countries, while Absa is closer to acquiring all the African banking assets of parent Barclays.

FNB parent FirstRand [JSE:FSR] recently embarked on an Africa intensive strategy and is planning to capitalise on the India-Africa corridor, while Nedbank 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.

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.

Currently lending rates in Zimbabwe range between 15% and 30%.