Banking
Chinese bank eyes major stake in Zimbabwean bank
(Xinhua)
Updated: 2010-07-22 14:53
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HARARE - A Chinese bank is eyeing a major stake in the Infrastructure Development Bank of Zimbabwe (IDBZ), IDBZ public relations officer said Wednesday.
Negotiations are currently under way between the China Development Bank (CDB) and the IDBZ -- formerly the Zimbabwe Development Bank -- for the CDB to acquire significant shareholding in the IDBZ, Priscillah Mapuranga told Xinhua.
She said an announcement would be made at the appropriate time.
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Mapuranga would neither say how much shareholding CDB wanted to acquire from IDBZ, nor at what stage the talks were.
However, at the opening of the 8th session of the Zimbabwe-China joint commission in Harare in early July, Zimbabwean Foreign Minister Simbarashe Mumbengegwi said he was happy to note the conclusion of negotiations between the two banks, which would allow the CDB to acquire "significant shareholding in the IDBZ."
"The partnership between the two banks will enhance the IDBZ's capacity to finance infrastructure projects in the country," Mumbengegwi said.
The Zimbabwean government established the IDBZ as a vehicle to mobilize infrastructure development and provide technical resources to public and private institutions using funds raised from both domestic and international markets.
The CDB is a major Chinese bond issuer and creditor to international energy projects which posted a net profit of $4.67 billion in 2009.
It is one of three banks established by the Chinese government to further national economic policies. The other two are the China Export-Import Bank and the Agricultural Development Bank of China. The CDB is more focused on investment, largely through its recently established China-Africa Development Fund.
The proposed partnership with the CDB will, therefore, put the IDBZ in a more robust position to fulfill its mandate, which also includes facilitation of industrialization, capacity building, energy development and provision of affordable housing.
It also comes at a time when the Zimbabwean government is proposing to wean off the IDBZ, together with several other state-owned companies, through either commercialization or privatization.
A decade-long economic meltdown has left most of Zimbabwe's financial institutions heavily under-capitalized, to the extent that a number of banks have struggled to meet the central bank's minimum capitalization thresholds, and, therefore, courting partnerships.
The IDBZ has also been identified as in need of urgent funding to be able to carry out its full mandate.