CTA: Standard Bank’s suspension creates uncertainty and speculation in business and in banking | Carta

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CTA: Standard Bank’s suspension creates uncertainty and speculation in business and in banking | Carta

3:42 CAT | 14 Jul 2021

CTA chairman Agostinho Vuma. [Photo: CTA]

“The decision of the Bank of Mozambique has created uncertainties and speculation in the business and in the banking fabric, due to the dimension of Standard Bank in the national market and has found economic agents unprepared, given that there is no knowledge of either a prior notice [of the central bank’s decision] or of any offence that Standard Bank might have committed,” the Confederation of Business Associations of Mozambique (CTA) writes in its newsletter.

According to the CTA, this complaint was raised last week at a meeting between the CTA and the International Monetary Fund (IMF) to assess the impact of the suspension the third-largest bank in the Mozambican financial system.

“CTA shared with the IMF this concern and also the information of a survey of companies that are clients of Standard Bank, the financial institution with the largest share of foreign currency deposits in the Mozambican financial system,” the CTA bulletin reads.

“Many large companies use this bank to carry out their international transactions. It is estimated that around 45% of the country’s total monthly imports are made through Standard Bank,” adds the same source.

According to CTA, the preliminary results of the survey indicate that companies that carry out transactions in foreign currency (including imports, exports, receipts and/or payments in foreign currency) have suffered from the suspension of Standard Bank in the form of delays in transactions, financial costs and freezing of payments and receipts.

Alexisimfmozcta — *IMF resident representative in Mozambique Alexis Meyer-Cirkel. [Photo: CTA]*

Standard Bank was suspended from carrying out all activities involving the conversion of foreign currency in the foreign exchange market on June 30, following the findings of an on-site inspection by the Bank of Mozambique.

Twelve days later, the regulator of the national financial system announced that misdemeanours had been filed against the banking institution and two of its managers, Mr. Adimohanma Chukwuma Nwokocha (CEO) and Carlos Domingos Francisco Madeira (Director of Corporate Banking and Investment), for serious breaches of a prudential and exchange rate nature.

In addition, the Bank of Mozambique says it has applied sanctions to Standard Bank Moçambique, SA in the total amount of 290 million Meticais, suspending for up to one year the bank’s foreign exchange activity of converting currencies.

Chukwuma Nwokocha was fined a total amount of 6.3 million meticais and was banned from holding corporate positions and management functions in credit institutions and financial companies in the country for a period of six years.

Carlos Domingos Madeira was fined 14 million meticais, and banned for the same length of time.

By Evaristo Chilingue

Source: Carta de Moçambique