africalegalbrief.com

Foreign-owned banks operating in Zimbabwe will soon be compelled to relinquish part of their shareholding to locals in terms of the country's indigenisation and economic empowerment requirements, if the new law being drafted by Government is passed.
Youth Development, Indigenisation and Empowerment Minister Cde Saviour Kasukuwere told The Sunday Mail last week that his ministry was in the process of drawing up water-tight legislation that would lay out new regulations on how banks should relinquish part of their shareholding to indigenous Zimbabweans.
"We are currently working on a new legal and binding instrument for banks to comply with the law," he said.
He said the fact that his ministry had drawn up statutory instruments for other sectors made it prudent for similar legislation to be effected for the financial sector.
"As it stands, we have already established the binding instruments for some key sectors such as manufacturing and mining. We feel that it is prudent to have similar instruments for the banking sector," he said.
Minister Kasukuwere said the new regulations for the banking sector were being crafted in consultation with the Minister of Finance. Minister Tendai Biti last week said negotiations with the three foreign-owned banks - Standard Chartered, Stanbic and Barclays - were taking shape.
"The discussions between my ministry, Minister Kasukuwere and me are indeed ongoing and we are focusing mainly on the thresholds," he said.
He said the indigenisation of the financial sector was complex and needed to be handled carefully.
"You should understand that banking is a unique sector that is different from either mining or manufacturing, so it is a complex process to come up with the required percentage thresholds.
"Banks do not have prescribed assets like mining or manufacturing because they rely on the intrinsic value of what they possess. The banks are as good as their clients or the deposits they have," he said.
Barclays Bank spokesperson Mr Dennis Mambure said his bank was actively negotiating with the Government. Mr Mambure said Barclays was committed to issuing shares to indigenous Zimbabweans as it was the first financial institution to do so in 1991.
"In 1991 Barclays was the first financial institution to offer 30 percent of its shares to the Zimbabweans. At the time of the float, potential investors were required to pay for at least 50 percent of the total value of their required shares with the remainder payable over 12 months. To date some of the investors who bought shares in 1991 still have shareholding in Barclays," he said.
Standard Chartered head of corporate affairs Lillian Hapanyengwi said:
"We have submitted our provisional plans, in accordance with the Act, to the Ministry of Youth, Indigenisation and Empowerment.''
She said Standard Chartered would remain committed to doing business in the country and to comply with the indigenisation law.
Stanbic Bank did not respond to the questions sent by this paper on Wednesday last week.