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the extension would affect the deadlines already set.
These are US$50 million capitalisation by June 30, 2013, US$75 million by December 31, 2013 and US$100 million by June 30, 2014.

Some banks are yet to meet the first deadline of US$25 million by December 31 last year.
Dr Gono said the extension was is in response to concerns raised by some foreign investors interested in investing in the banking sector but wary of the indigenisation and empowerment regulations compelling foreign-owned firms to cede 51 percent stake to locals.

Dr Gono was addressing delegates at a breakfast seminar organised by the Confederation of Zimbabwe Industries on the impact of reduced interest rates on the banking sector and business in Harare yesterday.

He said some local banks failing to raise the capital might have been affected by this as they sought to raise capital offshore as liquidity constraints continue to affect local investors.

“That is why we have come up with what we call Vision 2020, where we expect all banks to have complied by 2020,” he said.

“We are urging industry to also come up with their own plans. If we look at it, 2020 is only 408 weeks or 94 months away. So it is not too far away.”

He said the idea was to see a banking sector fully capitalised to the tune of US$100 million by 2020.
Last year, the central bank raised minimum capital requirements for commercial banks to US$100 million from US$12,5 million in a phased capitalisation exercise.

“We want to see a banking sector where a single bank is capable of underwriting eight times its capital base, which will then be US$800 million,” said Dr Gono.

He said that although capital was not a panacea for creating a stable banking sector, it was the final line of defence against signs of trouble.

“So we cannot relent on that aspect. Capital is a proxy of the commitment of the owners of the bank to business itself. It is also international consequence that banks should be adequately capitalised,” he said.

The governor said banks competent enough to raise lines of credit have an advantage, as lenders prefer banks with more capital.

He added that most banks had already complied with the US$25 million capital thresholds, except for only two or three still tying up loose ends before they comply.

The central bank, he said, would help those banks that approach it with genuine difficulties in meeting the capital requirements.

“There will be no penalties on banks that fail to get to US$25 million but there is an opportunity for them to downgrade to a micro bank,” he said. “We do not just put a bank under curatorship, but there are 13 steps that we have to go through before we can do that.”

Dr Gono reiterated that he had not yet found a reason to shift from his position of not supporting the indigenisation of the banking sector.

“For the banking sector, a one-size-fits-all policy is not a model that we can adopt because of the unique nature of banking,” he said.

He added individuals interested in going into banking could approach the central bank for licences.
“There will be those who will say it is now difficult to go into banking because the governor has torpedoed the banking sector by raising the capital levels.

But there are various forms of banking institutions, such as micro-finance, where you only need US$250 000 to get in and micro-finance banks where you only need US$5 million as capital,” he said.

He said aspiring indigenous bankers should not cite capital levels as an impediment to entering the sector.