BARCLAYS Bank of Zimbabwe Ltd (Barclays) is withdrawing its prestigious Barclaycard products and replacing them with a new system by the end of the year, Alex Jongwe, the
bank’s managing director, has confirmed.
The international bank, whose headquarters are in the United Kingdom, said the critical foreign currency shortage had already forced it to withdraw its international credit card facility.
Insiders alleged that the card was being abused by some unscrupulous customers who were withdrawing foreign currency in neighbouring countries, only to resell it at exorbitant prices on the black market in Zimbabwe.
Barclays said unless the country’s economic situation improved, it would be forced to discontinue its local credit card system but would offer customers an alternative card product.
Responding to written questions, Jongwe this week said for Barclays to adopt the new system it would have to make a significant foreign currency investment.
He said: “Such an investment is not justifiable in the present economic climate, as the level of card usage is quite low. The low usage is due to shortages of basic products in the formal market. This has led us to work within a cash economy but it will remain under review.”
Barclays, has been reviewing and restructuring its services in Zimbabwe.
The bank said the critical shortage of foreign currency had forced it to withdraw its international credit card facility.
Jongwe said: “We are presently working on the introduction of card products, which do not require the support, or cost, of an international operating system. It is too early to be more specific.”
He said products and services offered to customers were constantly under review to ensure that they matched their needs and were “provided at an affordable cost”.
“This is not new but an ongoing process,” Jongwe said. “We regularly review the suitability of such products to evaluate whether they are meeting the customers’ needs. We are also reviewing the suit of card products.”
He said recent changes to legislation governing the operations of commercial banks had allowed them to offer customers services which were previously only available from leasing companies such as Fincor Finance Corporation Ltd, the bank’s subsidiary.
“This has enabled Barclays to bring its subsidiary company, Fincor, ‘in-house’ and make it a division of the bank,” Jongwe said. “The products and services for which it is a market leader remain available to customers.
The advantage to Barclays is that it can now save on the time and cost of running Fincor as a separate company and combine some roles which were duplicated because of its then status as a separate, but wholly-owned, company.”
For the period ending December 31 2002 Fincor recorded pretax profits of $572 million in historical cost accounting terms compared to $354 million in the previous period.
The profits after tax amounted to $350 million. In current cost accounting terms, Fincor recorded a loss of $605 million after tax compared to a loss of $211 million for 2001.
Jongwe said the bank remained committed to the development of Zimbabwe and, as such, its policy on lending to the agricultural sector had not changed.
He said: “Funding to agriculture is done on a case by case basis, as it has always been in the past. Although direct lending to individual farmers has dropped, this has been the result of a decrease in demand.”
Barclays recently subscribed $3,5 billion to Agrobills for onlending to Zimbabwe’s struggling agricultural sector.