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Zimbabwe Bank Manager Assaulted as Clients Fail to Draw Cash

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Dec. 18 (Bloomberg) -- Zimbabwe’s Allied Bank Ltd. had the manager of one of its branches in Harare assaulted by customers angered that a shortage of liquidity meant they were unable to withdraw cash.

No arrests were made following the Dec. 16 incident, which resulted in the doors of the branch being smashed, said Paul Nyathi, a spokesman for the police in the capital. Allied Bank was bought last year by Transport Minister Obert Mpofu after his investment company injected $23 million into the lender.

“We sincerely apologize for the inconvenience emanating from the prevailing cash shortage,” Allied Bank Chief Executive Officer Stephen Gwasira said in a statement yesterday. “The bank is making aggressive efforts to address the liquidity constraints.”

Lines also formed at Metropolitan Bank and Johannesburg-based Business Day newspaper reported that some Zimbabwe lenders have imposed limits on the cash clients can withdraw. The liquidity crunch partly results from the central bank not taking on the role of “lender of last resort,” said Sij Biyam, CEO of the Bankers Association of Zimbabwe.

“The main problem which is affecting most of these institutions is because of liquidity issues rather than solvency issues,” Biyam said in a phone interview from Harare. “The fault line is the absence of lender of last resort in the country, because there is no overnight lending.”

Liquidity Crisis

The southern African country’s central bank said in March that two or three banks were struggling to raise funds to meet part of a $100 million capitalization.

A call by Bloomberg to Metropolitan Bank wasn’t immediately answered.

Locally owned Zimbabwe lenders held deposits of about $3 billion, more than double the amount at seven foreign-owned banks, the central bank said in May. Foreign banks that operate units in the southern African nation include Barclays Plc and Standard Chartered Plc, as well as South Africa’s Standard Bank Group Ltd. and Nedbank Group Ltd.

Steward Bank isn’t affected by the “liquidity crisis” after the lender formerly known as TN Bank implemented restructuring, said Douglas Mboweni, CEO of its owner, Harare-based Econet Wireless Zimbabwe Ltd.

“We brought in experts who looked very carefully at what was needed to operate a bank successfully in a market with no lender of last resort,” he said. “We cleaned up the balance sheet, wrote off bad loans, and fully recapitalised the bank.”

To contact the reporter on this story: Godfrey Marawanyika in Harare at gmarawanyika@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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