Barclays Bank, one of the largest commercial banks in the country, says it will shut down 10 branches in the small outlying cities, most of which have been adversely affected by the demise of the commercial farming sector.
It will also close and amalgamate seven of the larger city branches in Harare and Bulawayo to improve efficiencies and cut costs. The move is expected to reduce the staff by 30 percent, which is about cost 500 jobs but market analysts say this is probably the way most banks will have to take to survive.
A new entrant into the financial services sector, the Royal Bank is expected to buy the Hwange, Kadoma and Rusape branches, while Century Bank is to purchase the Gokwe, Gwanda, Kariba and Zvishavane branches.
The bank said, the Chitungwiza, Msasa and West End branches will merge with the First Street Branch; Highfields and Nelson Mandela Avenue branches will merge with Kurima House; Westgate business will be transferred to Avondale while in Bulawayo, Leopold Takawira Avenue Branch will merge with the Main Street branch leaving the second largest city with only one branch.
The financial services sector has been doing fine on paper though the central bank has warned that some banks are overstretched. Analysts say a return to normal macroeconomic fundamentals such as inflation targeting, real interest rates and the lifting of controls on foreign exchange will materially alter the current banking landscape.
‘The opportunities in forex trading, equities and interest rate derivatives will disappear and much of the growth that has been enjoyed by the commercial banking sector will have to be unwound or rationalized,” Imara Capital said “Although Barclays’ earnings streams are sustainable, they have taken a bold step to be the pioneers in this area, in anticipation of the “crunch”.
“Although the banking sector at large is trading at a significant discount to the rest of the market, we believe this to be justifiable, taking into consideration the absence of a defined monetary policy and the attendant risks that imposes for players in the financial market,” it said.