We recognise and appreciate the fact that the move by the Bank of Zambia is accordance with the Central Banks powers enshrined in sections 81(1) (c), 81 (2) (a), of the Banking and Financial Services Act.
However, the Agent appointed, being a competitor with vested interest in the Zambian banking sector raises questions. It should be highlighted that First National Bank is a subsidiary of FirstRand Group, and the largest contributor of the Group’s bottom line.
This, therefore means that a competitor is managing the affairs of another rival company. This has got implications on the banks’ future vis a vis competition in the sector because the chances of a competitor providing fair and accurate leadership without ill intentions are minimal.
It is also important for the Central Bank to be vigilant by ensuring that confidence among the customers is maintained and guaranteed as earlier indicated. Unfortunately, CUTS has observed that there has been a run on Finance bank which need immediate attention On the other hand, the triggered bank run and the potential erosion of confidence in banking will have, in the short run liquidity implications, increase interbank lending rates which may ultimately be passed on to consumers. This is evident by the reported sudden jump from the interbank lending rates of 2.5 percent to 10 percent over this period.
The banking sector has become integrated through shared services. Holder of visa electron cards can access banking services through other Banks’ ATMs and point of sale machines owing to improved technology.
The banks are dependant on infrastructure of other banks to operate and Finance Bank is one such bank that has provided this service owing to its large branch network. Therefore, if the bank collapse, some consumers with heavy reliance on finance bank’s infrastructure will be disconnected vis a vis Finance Banks employees losing.