(Updates with size of economy in eighth paragraph.)
May 20 (Bloomberg) -- Zimbabwe has drafted a law that will prevent institutions from owning more than 25 percent of a bank without authorization from the southern African nation’s finance minister.
Individual shareholders will be limited to holding 5 percent, according to the 2012 Banking Amendment Bill, a copy of which was obtained by Bloomberg News from Treasury officials. The bill will also prohibit banks from buying their own stock or making loans using their shares as security. Standard Chartered Plc and Barclays Plc control banks in the country.
Zimbabwe Finance Minister Patrick Chinamasa said last month that there is no plan to force all foreign-owned companies to sell or cede 51 percent of their shares to black Zimbabweans. The Bankers Association of Zimbabwe, which counts among its members the units of Barclays and Standard Chartered, discussed the proposals in the amendment bill with the Finance Ministry about three weeks ago, said Chief Executive Officer Sij Biyam.
“We don’t have much control as to when the process would be finalized, because that is a political process,” Biyam said in a telephone interview yesterday from the capital, Harare.
Barclays owns 67.71 percent of Barclays Zimbabwe, while Standard Chartered owns 100 percent of its Zimbabwean operation. Stanbic Zimbabwe is a wholly-owned unit of Johannesburg-based Standard Bank Group Ltd.
The amendments aim to improve banking governance, introduce greater transparency and allow regulators to monitor bank holding companies more easily, according to the bill. Zimbabwean banks will also be required to display the rates of interest they charge at all branches and publish them every six months in newspapers.
Chinamasa said last month that Zimbabwe will decide how much of foreign companies black citizens should own “sector by sector.” The government is “quite comfortable” with the injection of foreign capital in the banking industry because it “will increase the volume of credit to the productive sector,” he said.
The easing of the indigenization requirements signaled by Chinamasa last month comes as Zimbabwe’s economy shows signs of deflation caused by a fall in consumer spending since elections last year. The government of President Robert Mugabe, in power since 1980, is trying to revive an economy that was 49 percent smaller last year than it was in 2000, according to ZimTrade, a state agency that promotes trade and investment.
Zimbabwe’s parliament passed the 51 percent ownership law in 2008 and began enforcing it three years later, compelling foreign and white-owned companies with assets of more than $500,000 to shift majority ownership to black Zimbabweans. Mining companies were the first to be affected and Impala Platinum Holdings Ltd., Anglo Platinum Ltd. and Aquarius Platinum Ltd. have already complied with the law.