Bank workers cry for protection

01 Mar, 2015 - 01:03 0 Views
Bank workers cry for protection

The Sunday News

John-Mangudya
Ngonidzashe Chiutsi Business Correspondent

THE Zimbabwe Banks and Allied Workers Union has challenged the Reserve Bank of Zimbabwe and the Parliament of Zimbabwe to come up with concrete measures to save the local banking sector from further demise. The financial sector has shown signs of stress with two banks Allied Bank and AfrAsia surrendering their banking licences this year, leaving more than 600 workers jobless.

This is in addition to Tetrad Investment Bank Limited which has been placed under provisional judicial management after facing operational challenges.
Other financial institutions that have collapsed over the years include Century Discount House, Rapid Discount House, Sagit Finance House and Genesis Investment Bank, Royal and Trust Bank.

In an interview Zibawu assistant secretary-general Mr Shepard Ngandu said problems in the banking sector have left thousands of workers jobless while eroding confidence in banking among the public.

“As banking workers, we are concerned about the state of affairs in the sector as banks are closing down. The reason why this is happening is that the bank regulator is not doing a proper job. It should not take a casual approach where you hear the RBZ governor saying what is happening in the sector is normal. The situation is abnormal. This is not business as usual,” said Mr Ngandu.

He said the problems affecting the sector was due to a plethora of issues chief among them poor corporate governance especially by the indigenous banks.
“The problem is that there is poor corporate governance in the banking sector where the executives are looting bank funds. They borrow money and fail to pay loans and this is tantamount to theft, fraud and this is going unchecked. People are playing with workers’ lives and innocent people. They take loans from banks even without collateral security and fail to pay back,” he said.

“Individuals, pensioners and institutions are losing money they would have invested in the banks. Because of that people are now losing confidence in the banking sector and we are going to see more money circulating in the informal market.”

He said the union is going to hand a report to parliament as part of its efforts to lobby for laws that can stop the rot in the banking sector.
“On 15 March, we want to petition the RBZ to address the challenges in the banking sector. We also want to approach parliament and ensure that our issues are addressed. We need sufficient laws to protect depositors’ money from unscrupulous bank officials,” he said.

“It seems anyone can now get a licence today and collect people’s money and abuse it and go scot free. We want the parliament to come up with laws that criminalise such acts.”

Mr Ngandu said earlier this year they had estimated that 1 000 workers were going to lose their jobs but the number might be surpassed as they were signs other banks could collapse too.

“We had projected that about 1 000 workers will lose their jobs this year and we are almost justified as about 679 workers lost their jobs when Allied Bank and AfriAsia closed. We are going to see over a thousand workers in the banking sector losing their jobs this year,” said Mr Ngandu.

A senior bank worker in Bulawayo who spoke on condition anonymity confirmed the rot in the banking sector, saying it was rampant with some people even borrowing money without proper documents.

“We are sometimes forced by the top management and shareholders to approve loans to some people like politicians even if they don’t have collateral,” said the worker on condition of anonymity.

Lupane State University Department of Accounting and Finance chairperson Mr Julius Tapera told Sunday Business that problems in the banking sector were due to overbanking.

“We are overbanked. While it was a very noble idea to open up the sector to local players at that time we were probably not very proactive in addressing some of the challenges that then brought about the collapse of some institutions.

“We would rather have fewer banks with wider branch networks to service clientele from different geographic locations,” said Mr Tapera.
The RBZ could not respond to questions from Sunday Business but when RBZ governor Dr John Mangudya visited Bulawayo early this month he said that the central bank was engaging bank owners and shareholders to find a solution to the banking crisis that has seen banks closing shop leaving hundreds of workers without jobs.

He said challenges facing the local banking industry will be over by June.
“We are addressing the challenges faced by informal sector and our wish and objective is that by June this year we don’t want to have distressed banks in Zimbabwe. We want to ensure that the banking sector is viable. We want to improve confidence in the banking sector,” said Dr Mangudya.

Bankers Association of Zimbabwe president Mr Sam Malaba also said banks were responding to challenges facing the local industry by introducing favourable bank facilities such as low cost income transaction accounts.

Depositors Protection Corporation spokesman Mr Allen Musadziruma said bank closures were eroding depositor confidence.
“Generally bank closures negatively affect depositor confidence in the banking system,” he said.

He, however, highlighted that bank closures were a blessing in disguise as they remove “bad apples” in the sector.
“However, despite being the last resort, a bank closure may be a necessary procedure in order to protect the interests of depositors and creditors and preserve the overall stability of the banking system. Closure of failed banks that are of no systemic importance has the beneficial effect of removing bad apples from the system, in order to retain only safe and sound institutions which are able to fulfil their financial intermediation responsibilities,” said Mr Musadziruma.

The banking industry is battling with problems such as non-performing insider loans, subdued business and low banking appetite from the public.
The difficult macro-economic conditions have also made it difficult for the majority of the indigenous banks to secure fresh capital.

This has resulted in the banks either being forced into liquidation or voluntarily surrendering banking licences and becoming automatic candidates for liquidation.

There are also reports some banks are streamlining their operations by offering staff voluntary severance packages while others are eliminating one post out of every six.

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