Banks caught amid EWC disaster

3WA said:
What happened in Zimbabwe? Was any bonded land expropriated? How did the Zimbabwean banks respond?
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I started digging to answer this:

From 2003:

The financial sector, which accounts for about 9 per cent of GDP, is the other resilient sector in the economy, having experienced a real growth of about 2 per cent in 2001. The main reason for this growth, however, lies in the distortions created by the overvalued exchange rate and the opportunities of profit through dealing in foreign currency on the parallel market. In addition, banks are the major custodians of domestic debt of the government. Moreover, the low interest rate policies undertaken by the Central Bank have led to a dramatic surge in the stock market, unrelated to the economic fundamentals of the counters being traded. Whilst Zimbabwe has largely liberalised its balance-of-payments current account in line with the IMF Article VIII, the country’s capital account still has residual controls where particularly outward investments by local residents have to be under Central Bank approval. This, coupled with foreign exchange shortages, has seen most institutional investors taking recourse on the Zimbabwe Stock Exchange (ZSE) as a hedge against the highly negative returns on the money market. Buoyancy of the ZSE contrasts sharply with the general slump in economic productivity, underscoring a pronounced stock market bubble.

However, the sector is beginning to show signs of recession, stemming from the contagious effect of the drowning productive sector. The effect of the land reform crisis is posing major challenges, both in terms of non-performing loans arising from the commercial farms evicted and the risky lending to the newly resettled farmers that may be imposed by the government. Moreover, the increased government control on the foreign exchange market may contract the profits that banks make on trading on the parallel market
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Also:

Some of Mugabe’s advisers apparently knew better than to upend property rights. In early 2000, Mugabe was handed a confidential memo from the Reserve Bank of Zimbabwe, the country’s central bank. The memo predicted that going forward with farmland seizures would result in a pullout of foreign investment, defaults on farm bank loans, and a massive decline in agricultural production. 5
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www.cato.org

How the Loss of Property Rights Caused Zimbabwe's Collapse

www.cato.org www.cato.org

So Zimbo banks managed to find ways to make money even though people were defaulting on mortgages. The suggestion, if not the explicit statement, is that expropriated owners were treated as defaulters on their loans.

Elsewhere, I found that 11 out of 40 Zimbabwean banks closed in the Zimbabwean Banking Crisis of 2004 (page 173 in link).

Upshot: looks like banks can make some short term gains as the economy collapses, followed by going bust.
 
How long do you think the EWC process will take? I mean if it will take about 6 months stop paying your bond and get your house respossed and make it the banks problem?
 
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The banks are BEE compliant and in the same bed with the government. Bend over wnkers.
 
It's YOUR money that is currently in the bank that they lend out, plus they lend out more than they have. The vaults are empty, and the gov't taking ownership of private property will kill banks, and your savings along with that. Pietie's bond payment and your trust in the bank is what assures that you get your money at the ATM. Maybe bitcoin isn't such a bad thing after all.

Doesn't matter if they implement expropriation responsibly, just the thought of this corrupt government having the power to take what they want willy-nilly will/is sending the economy into a death spiral.

Even the staunchest ANC supporters with anything in the bank or any assets should be very concerned. And i'm sure any zimbo will attest.
 
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SoldierMan said:
Bleh Blah Blah
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Tsek.
Anyone calling for the banks to pay for the kuk that is EWC is a moron. End of story.
You act like a moron on a public forum and got called out for it. Deal with it troop.

And no dwiss-face, I didn't say the owner of the property should pay.
 
ShaneE said:
I also dont think they'll expropriate people's homes - it didn't happen in Zim either.
They can justify expropriating land, and will still get some international support, specifically from the (far) left - But exprorpriating homes would be too much of a human rights issue to get away with, and would most likely cause international intervention - My thoughts, so could obviously be completely wrong
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They also wont target normal bonded homes owned by individuals, unless you own several and losing one wont have a huge impact on saod person. This is why the banks seem to not care at this point. Targeted properties will be unbonded or have low settling risk.

I do agree however that once the law is formally passed it will have a huge effect on investment sentiment which would impact on bond repayments regardless whether those properties are expropriated or not.
 
rambo919 said:
@SeRpEnT @SoldierMan

boys boys please..... at least step up the entertainment value of the insults come on you know you can do better than this

Or act like grownups your choice
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Hey he came out swinging with the insults for no reason at all - why I honestly don't know, maybe he got dumped by his girlfriend because his willy is too small - but I just responded in kind. Honestly I think he's either drunk or he is actually a she and has serious period problems, in which case I kinda understand her predicament. But then she needs to come clean and admit as much.
 
Urist said:
Even the staunchest ANC supporters with anything in the bank or any assets should be very concerned. And i'm sure any zimbo will attest.
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Maybe that's why there is practically zero opinion offered on the subject from the otherwise extremely vocal myANC contingent?
 
Well, if barry white was the great walrus of love.... I guess BDL is our great walrus of economics
 
newby_investor said:
The thing is though, that if the bank doesn't operate within the bounds of the law, the government can take away its banking licence pretty quickly, and there goes an entire business.

Government would just need to make an example of one bank, and the rest would fall in line pretty quickly.
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The entire business is gone anyway if any of this actually happens.
 
SoldierMan said:
Hey he came out swinging with the insults for no reason at all - why I honestly don't know, maybe he got dumped by his girlfriend because his willy is too small - but I just responded in kind. Honestly I think he's either drunk or he is actually a she and has serious period problems, in which case I kinda understand her predicament. But then she needs to come clean and admit as much.
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You know you are desperate when you resort to lame willy jokes...
I am not going to waste my time with you anymore. The other forumites are clearly annoyed and I will leave you alone now and shutup.
 
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