Banks Separate Foreign Currency Accounts?
Local banks have begun separating local and international Foreign Currency Accounts (FCAs) as the surrogate local FCAs appear to limit their clients from transacting freely.
This comes as most banks feel that the local FCAs are as good as RTGS accounts which are regulated by the Reserve Bank of Zimbabwe and separating the accounts will make life easy for transactions. It also comes as most banks are failing to meet USD cash withdrawals for domestic nostros resulting in the creation of an alternative nostro discount market.
Bankers Association of Zimbabwe (BAZ) president Ralph Watungwa said the latest development was not the official position from the organisation, but initiatives were being taken by individual banks in response to the market demands.
“Those decisions are made at bank level and there is no collusion from the association at all. Each bank is doing what it thinks is best for their situation,” said Watungwa.
In correspondence to clients, a leading commercial bank advised it had opened two forex separate accounts.
“Please be advised that a new account to cater for local USD RTGS transactions has been opened for you. The new account will be credited with incoming USD RTGS and your existing FCA will cater for all the USD cash deposits or incoming Telegraphic Transfers.
“Therefore, the existing FCA will still enable you to access forex cash withdrawals and process Telegraphic Transfers, while the new account will make it easier to transact locally,” wrote the bank to one of its clients.
Top economist John Robertson said the new measures by the banks was to be expected because depositors do not trust the Zimbabwe dollar yet.
“What the banks are doing is to be expected because they want to ring fence foreign deposits and avoid mixing with the domestic nostro accounts which are still to be fully trusted and might not be real money
“The truth of the matter is that the two accounts are different because the local one is controlled by the RBZ, while the international account is autonomous and safe.
“I can confirm that our bank has taken the same steps as others so as to make our customers feel secure and comfortable when banking with us,” said the banker.
Government, through the Ministry of Finance and Economic Development and the RBZ, re-introduced FCAs in 2018 while under pressure to safeguard investors’ earnings and deposits. This was when the central bank struggled to meet foreign remittances while foreign correspondent and intermediary banks ditched Zimbabwe.
FCAs which existed before were raided by the central bank back then and later rendered ineffective when the economy adopted a multi-currency regime in 2009 after a decade of economic stagnation and hyperinflation rendered the local dollar valueless.
The RBZ also engaged the African Export-Import Bank towards a US$500 million Nostro Stabilisation Guarantee Facility to provide FCA holders with assurance that foreign currency shall be available on request. – Financial Express
