Zimbabwe runs out of its new money

 Harare (Reuters): Within five days of issuing a new currency in Zimbabwe, the cash ran out at commercial banks in many parts of the country. Last week Zimbabwe’s central bank released about US$12 million (presumably R165 million) of new cash, known as bond notes, and this money is supposed to have the same value as the US dollar, which was adopted as the main currency since the last financial crisis eight years ago. “The banks have run out of bond notes in their vaults. We will be having a meeting with the banks and see how we can address the situation,” Reserve Bank of Zimbabwe deputy governor Kupukile Mlambo told journalists in second city Bulawayo at the weekend. He said the central bank did not want too many bond notes in circulation as this would threaten the new currency’s “viability”. Bank queues began last April when Zimbabweans discovered US dollar cash was running out. The government slapped import bans on many products, mostly from South Africa, and commercial banks started limiting the amount its account holders could withdraw per day.

Zimbabwe also banned exports of US dollars from Zimbabwe. Plastic money expanded rapidly, but still the queues grew as teachers and other civil servants were unable to withdraw all their salaries when they were paid, and most of them were paid late each month during 2016.

Mlambo lashed out at the manufacturing sector, much of which collapsed after the 2000 land invasions hacked into the economy largely dependent on commercial agriculture.

“We are not producing anything in the country. If you see a country surviving on beer manufacturing and airtime-selling companies only, this is a sign of a sick economy. It seems people are spending too much on beer drinking and phoning,” he said.

Mlambo said use of US dollars and other foreign currencies from 2009 after the worthless Zimbabwe dollar collapsed meant the central bank had no control over issues such as bank charges in domestic commercial banks.

 “When we adopted the multi-foreign-currency system, we lost our independent monetary policy. We no longer have the power to stop banks from doing unethical things,” he said.

Most of Zimbabwe’s locally owned commercial banks went broke since 2000. The largest is the Commercial Bank of Zimbabwe, CBZ, which handles most public service salaries, and admits it has a massive debt book. Since the liquidity crisis began earlier this year, three much smaller foreign-owned banks – Standard Chartered, Stanbic, and Barclays Bank – closed their doors to new account holders.

Attijariwafa Bank, UBA sign MoU

 Casablanca (AFP): Two African leading banking groups – Attijariwafa Bank and United Bank for Africa Plc – have signed a MoU to strengthen their collaborative efforts in correspondent banking, investment funding, trade finance and project finance on the continent. The framework document, which outlines key areas of cooperation between Attijariwafa and UBA was signed when His Majesty King Mohammed VI visited President Muhammadu Buhari at the Presidential Villa, Abuja. It was signed by Group Chairman, UBA Mr. Tony Elumelu and Chairman and CEO of Attijariwafa Bank Group Mr. Mohamed El Kettani. According to the MOU, both banks will organise business to business missions to identify and develop business and investment opportunities between Nigeria and Morocco as well as across their respective African networks. Speaking after the agreement, Elumelu said: “This collaborative effort is a historic milestone. As two groups with considerable footprints in Africa, we see huge potential in bringing our collective expertise in banking to provide Africa-led solutions to the needs of Africans.”

El Kettani added: “Nigeria is the largest African economy and a leading commercial and financial hub in West Africa. It goes without saying that our group should collaborate with outstanding players, such as UBA Plc, to provide customised assistance to African and international companies to grow trade and investment flows, between not only Morocco and Nigeria, but also in all countries where our two groups are established.

 “The MOU we just signed is a first but major milestone in a long-term partnership. It also heralds promising perspectives for African and international investors worldwide.”

 LGT buys ABN Amro’s Asian ops

 Hong Kong (AFP): LGT, the Lichtenstein private bank, has bought ABN Amro’s private banking business in Asia and the Middle East for an undisclosed sum, the latest development in Asia’s volatile private banking space. Owned by the Princely House of Lichtenstein, LGT expects to see its assets under management (AUM) in Asia rise to over $40 billion as a result of the transaction, and $60 billion overall. In 2015, LGT had AUM in Asia of $25 billion, and ABN Amro $19 billion, according to figures from Asian Private Banker.  “This acquisition will allow us to further extend our market position and to achieve further profitable growth,” said Prince Max von und zu Liechtenstein, LGT’s chief executive. The private banking and wealth management sector in Asia is currently in a state of flux. In October, Australian bank ANZ announced the sale of its retail banking and wealth management units in five Asian markets to DBS, while earlier this year, Swiss private bank Union Bancaire Privee acquired Coutts International from Royal Bank of Scotland in March last year, particularly hoping to leverage its Asian operations.

Julius Baer, and DBS had both considered acquiring ABN Amro’s private banking business in Asia, Bloomberg reported in October.

Julius Baer, as well as other banks, including Credit Suisse, BNP Paribas are also looking to grow by hiring more wealth managers, with the goal of targeting Asia’s newly emerging rich.

The competition is proving fierce however, particularly for those assets that have made it out of China already.

 “Too many banks are chasing a pool of Hong Kong and Singapore-booked AUM that is not large enough, nor growing fast enough, for them all to build up to a reasonable scale,” said Toby Pittaway, partner at consulting firm Oliver Wyman.

Nonetheless, scale is essential for private banks in Asia to make operating in the region sustainable, both in terms of the costs and capital required.

 Barclays exits retail banking in Europe

 London (AFP):  Barclays has sold off the last vestiges of its retail banking operations in Europe with a deal to offload its French consumer businesses to private equity firm AnaCap. The financial services-focused buyout house has agreed to buy a network of 74 branches, wealth and investment management, life insurance and brokerage operations employing about 1,000 from Barclays for an undisclosed sum. The deal will cut the lender’s risk-weighted assets by about £500m and reduce costs at its so-called non-core division by some £130m. It is the latest sale struck by Barclays, which has been scaling back under chief executive Jes Staley and his predecessor Antony Jenkins by disposing of non-core assets to focus its business in the UK and the US. As well as selling its operations in Africa, which had been a focus for former chief Bob Diamond, businesses in Asia, the Middle East, Italy, Spain and Portugal have been offloaded or wound-down. The French sale is expected to complete in the first half of next year.

The lender is keeping hold of its corporate and investment banking operations in the country.

 “This is another positive step in reducing our non-core unit, creating a more focused, simpler Barclays,” said Mr Staley, adding that it “completes Barclays’ exit from retail banking in continental Europe.”