There has been much noise over the issue of Standard Bank Zimbabwe leaving the country after about 130 years of independence. While given what we know the temptation is to somehow blame the Zimbabwean economy for the exit, the truth is much more nuanced as we will reveal below. Another issue is the sudden announcement that has seen a lot of customers panicking as they fear being abandoned. If you are a customer there is no need to panic. The bank will be making an orderly withdrawal from Zimbabwe and will make arrangements and your life is unlikely to be negatively affected by this exit.
To understand what is going on it is important to understand why StanChart is leaving in the first place. Standard Chartered is Zimbabwe’s oldest bank having landed on our shoars some 130 years ago when the so-called settlers came to Zimbabwe. This means the bank has stuck with the Zimbabwean market through thick and thin including during two full-blown wars, during the Federation and UDI eras and sanctions. They have more than earned their slogan: Here for good, here to stay.
They also have another good reason to say that, unlike other British banks, Stan Chart is a truly colonial bank and I don’t mean that in a negative way. The bank, or technically banks, owes its success to the colonies. The Standard Bank of South Africa rose in rank thanks to the diamonds and gold of South Africa while the Chartered Bank of India rose to prominence thanks to wealth made in India. However, despite it being here for good StanChart has always been led by an executive that is not afraid to make hard decisions. They slowly divested from South Africa’s Standard Bank which has now become a behemoth of its own-it operates as Standard Bank in most markets and Stanbic in places where the original StanChart also operates.
Sometimes Zimbabwe has a way of making things about themselves even if they are clearly not about them. That’s understandable, it’s human instinct. The exit of StanChart from Zimbabwe is not about the Zimbabwean economy at least not solely. The higher-ups at StanChart did an analysis and established that Zimbabwe and the other markets like Angola are only contributing less than 1% to their bottom line. I can also imagine that the same market is also contributing more than 1% in terms of headaches and administrative complications. There doesn’t seem like there are good growth prospects in these markets either. To simplify their lives StanChart is simply doing what any of us would do by cutting off the glut. As part of this operation, they are even curtailing their operations in Hong Kong a strong financial market.
Also contrary to the panicky revelations out there, Zimbabwean account holders are not being left in the cold. StanChart will probably sell these subsidiaries as a going concern just like what they did with their South African operations. StanChart Zimbabwe is a separate legal entity, all StanChart will do is sell off its shares to a new investor. They will probably try to sell off all their banks in various countries to one buyer. In the meantime, it will be business as usual at StanChart. Clients can deposit and withdraw money without fear. It’s probably different from the doomsday scenario being painted on the streets but those are the facts.