Press Statement

BANK OF ZAMBIA NOTICE OF TAKING POSSESSION OF INVESTRUST BANK PLC UNFORTUNATE:

ZUFIAW Friday, 5th March 2024 The Zambia Union of Financial Institutions and Allied Workers (ZUFIAW) General Secretary Mr. Kasapo Sundrea KABENDE has said that the notice by the Bank of Zambia to take possession of Investrust bank Plc was unfortunate, given that this is Government controlled Bank therefore, it could have been better for parties to reach a common understanding beforehand to avoid this development.

Mr. KABENDE was speaking succeeding the April 2nd, 2024, notice by the Central Bank to take possession of Investrust Bank Plc in line with Section 64 of the Banking and Financial Services Act No. 7 of 2017 (BFSA).

“As the recognized representative of eligible employees at the Bank, the Union is greatly concerned by the recent developments concerning one of our affiliate institutions. We understand that the Bank of Zambia has taken possession of the aforementioned Bank, and we sincerely recognize the concerns and anxiety this has caused among our members at Bank.” He stated.

“First and foremost, the Union wishes to assure all its members at Investrust Bank Plc that ZUFIAW is fully committed to safeguarding their interests during this transitional period, which is understandably difficult. The well-being and job security of our members are of paramount importance to ZUFIAW, and the Union shall spare no effort in ensuring that the rights and interests of Unionized employees are effectively addressed.” He assured.

“ZUFIAW is currently engaging with all relevant stakeholders, including the Bank of Zambia to ensure that the interests of all parties are taken into consideration and safeguarded during this process. As a Union, our objective is to ensure a smooth transition process that minimizes any adverse impact on the unionized employees of the Bank.” He stated.

Mr. KABENDE affirmed that ZUFIAW would be closely monitoring the situation and provide regular updates and moral support to the members throughout the process. Further, he called on the employees to engage the Union with regards to any queries and concerns thereof.

He also affirmed that the Union had over the years advocated for a tiered system approach in the management and implementation of the Monetary Reserve Ratio (MRR) for Commercial Banks, based on the individual performance. “We have in the past called for a tiered approach in the management of the Monetary Reserve Ratio which involves setting different reserve requirements based on factors such as the size, type, and risk profile of individual banks or clusters based on measurable and competitive criteria.” He noted.

He maintained that a tiered approach would work well in a small and growing economy like ours if the Central Bank adopted a criterion based on the following:

  1. Tailored Regulation: A tiered system in Zambia would allow more tailored regulation that considers the varying risk profiles and business models of different Banks. This can lead to more effective regulation by targeting requirements where they are most needed.
  2. Promotion of Financial Stability: By imposing higher reserve requirements on larger or riskier Banks, a tiered system can help mitigate systemic risk and promote overall financial stability. This can reduce the likelihood of Bank failures and financial crises.
  3. Encourage Competition: Lower reserve requirements for smaller Banks can encourage competition by reducing compliance costs and increasing their ability to lend. This can lead to greater diversity and innovation within the banking sector.
  4. Supporting Economic Growth: By allowing smaller Banks to hold lower reserves, they have more funds available for lending to businesses and individuals. This can stimulate economic growth by facilitating access to credit and investment opportunities.
  5. Flexibility: A tiered system would provide flexibility for regulators to adjust reserve requirements in response to changing economic conditions or emerging risks. This would allow for a more dynamic and responsive regulatory framework.

“Taking into account the foregoing arguments, we wish to notify all our stakeholders that the Union shall continue consulting with the Central Bank on the matter of a tiered approach to the Monetary Reserve Ratio, in order to ensure that even small/ start up Banks are given an opportunity to thrive in this environment.” He stated.

For/On Behalf of ZUFIAW,

Kasapo Sundrea Kabende (Mr.)

GENERAL SECRETARY & CEO

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