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Zimbabwe minister says foreign banks "safe" from closure over indiginization

Xinhua, April 2, 2016 Adjust font size:

Foreign-owned financial institutions operating in Zimbabwe have submitted credible plans on how they intend to localize their majority shareholding as required by the country's indigenization law, Finance Minister Patrick Chinamasa said on Saturday.

"I am pleased to advise that all the affected foreign-owned financial institutions operating in Zimbabwe, namely Barclays Bank, Stanbic, Old Mutual, CABS, Standard Chartered Bank, Ecobank, BancABC and MBCA bank have submitted credible Indigenization and Economic Empowerment plans before the deadline of 31 March 2016 in line with policy and the notice gazetted by the Minister of Youth, Indigenization and Economic Empowerment," Chinamasa said in a statement.

Some of the banks are subsidiaries of major international financial institutes such as Standard Chartered, Barclays, Old Mutual, South Africa's Standard Bank and African banking group Ecobank.

The announcement by Chinamasa allays fears that the country's foreign owned banks could have their licenses cancelled by government following an ultimatum issued by the indigenization minister recently to all foreign owned firms to submit an indigenization plan by April 1 or face closure.

Under the Indigenization and Economic Empowerment Act that came into force in 2010, all foreign companies operating in Zimbabwe were given a March 1, 2015 deadline to sell at least 51 percent of their holdings to locals but compliance by the companies was slow.

This resulted in government early this year giving the companies a March 31, 2016 deadline to submit the indigenization plans or have their licenses cancelled.

Chinamasa said the indigenization plans submitted by the banks were promotive of socially and economically desirable objectives and goals as set out in the gazetted indigenization frameworks.

Under the empowerment rules, the foreign-owned banks will have to sell at least 20 percent of shares directly to locals, while empowerment credits, such as funding for agriculture and youth and women programs, make up the balance. Enditem