THE Reserve Bank of Zimbabwe (RBZ) is understood to have used 2,8 million shares from financial behemoth Old Mutual to settle a US$30 million debt source
d from a local financial institution under an arrangement seen as highlighting the country’s default risk on external loans.
The shares, understood to have been valued at $3,9 trillion (or US$39 million) when the transfer of the shares was consummated in mid-July, had been used as a guarantee for the loan from the banking institution.
Sources indicated that the Old Mutual shares had since been hived off to the Johannesburg Securities Exchange (JSE) where they could be disposed of to raise foreign cash to liquidate the debt.
However, businessdigest understands that corporate institutions were effectively barred from trading in Old Mutual shares outside the Zimbabwe Stock Exchange (ZSE) under measures put in place by the bourse in 2003 to protect the counter from massive share flight into foreign stock markets.
The ban was part of stringent measures introduced by the ZSE to regulate trade in fungible Old Mutual shares. The Old Mutual shares can be bought from one bourse and sold on another where Old Mutual is listed.
The measures to protect the counter’s shares were also meant to ensure that all foreign currency realised from the trade of Old Mutual shares offshore was brought into the country through official banking channels.
The measures also bar Zimbabweans from buying Old Mutual shares from external registers using the scarce foreign currency, unless they have “foreign free funds”.
Zimbabwean companies and corporate bodies were outlawed from purchasing shares externally.
Old Mutual has a multiple listing on the ZSE, the JSE, the London Stock Exchange, the Malawi Stock Exchange and the Namibia Stock Exchange.
But sources said the financial institution had been granted a special dispensation to move the shares out of the country to allow repayment of the loan to its principal by selling the shares on the JSE to raise foreign currency for the debt repayment.
The deal between the central bank and the dually-listed financial institution, described by a source as part of intricate transactions structured by the central bank with local financial institutions to raise cash for foreign obligations, had raised questions over the source of the Old Mutual shares used to pay off the US$30 million debt.
Old Mutual shares on the Zimbabwe register amounted to 83 million before the transfer, but the share register seen by businessdigest this week indicated that the register now had slightly over 80 million shares.
Many companies that have failed to repatriate dividends to their foreign shareholders had also resorted to buying Old Mutual shares on the ZSE only to sell them on other foreign registers where they earn foreign currency for dividend payments.