BARCLAYS Bank Zimbabwe will look to grow its portfolio of Government-backed securities going forward, insisting that Government has never defaulted on its obligations in respect of these securities.
This comes as some sections of the market have cast aspersions on such Treasury Bills, saying they have become a form of surrogate currency to settle Government expenditure, and therefore there could be higher risk of Government defaulting on its paper.
Barclays Bank Zimbabwe CEO Mr George Guvamatanga told shareholders recently that the bank will look at acquiring more Government-issued Treasury Bills (TBs) as soon as they become available.
“I know there has been lots of talk in the market around Treasury Bills and since the introduction of the United States dollar the Government of Zimbabwe has never defaulted on its obligation on Treasury Bills and we do not believe that they will in the future
“So, I think we still have some appetite to look at Government securities when they become available,” he said.
Analysts have noted that a number of local banks have been earning a significant portion of their interest income from TBs as opposed to private sector loans, for instance.
And Guvamatanga seemed to concur: “Investment securities are expected to continue to grow, the level of interest earning assets and (Barclays’) investment securities will consist mainly of Aftrades and Treasury Bills.”
Earlier in March, Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya said there was around $2, 1 billion worth of TBs floating in the market, which were issued to bridge Government’s funding gap and clear the central bank’s debt.
In respect of Barclays’ likely exit from Zimbabwe, Guvamatanga said although negotiations were still ongoing, this was not going to affect the performance or outlook of the bank.
“The negotiations are still ongoing and the market will be advised of any outcome and cautionary announcements will continue to be issued in terms of the Zimbabwe Stock Exchange listing requirements.
“While the announcement signifies a potential change of ownership, the bank continues serving its customers. Significant efforts continue to be made to ensure smooth and stable transition whenever the divesture by Barclays Bank Plc is effected, building on the work that started in 2016.
“But in the meantime we continue on the Barclays Bank of Zimbabwe strategy of ‘safe banking model’. Our focus is to sustain the bank’s performance into the future even post the divesture. We will want to create new relationships with major players in the economy, while deepening existing ones,” he said.
On March 30, 2017, Barclays Bank Zimbabwe issued a cautionary regarding the potential divesture. Barclays Plc had informed Barclays Bank Zimbabwe of their engagement in exclusive discussions with a potential purchaser. — BH24