The reason for the three misdemeanors issued by the Bank of Mozambique against Standard Bank and two of its senior managers, namely the Managing Director,Chuma Nwokocha, and the Director of Corporate, Carlos Madeira, was allegedly this, according to sources in “Letter”: The SB was liquid, had excess dollars, wanted to sell dollars to the BM, but the BM did not buy and, to resolve the excess liquidity, made an illegal operation involving at least one client “. If this is true, the SB and its managers committed a very serious misdemeanor and their suspension from the foreign exchange market should be prolonged for more months. Eventually, Chuma and Carlos Madeira will be banned from exercising their functions in Mozambique. The SB’s ban pushes their customers for a rational behavior: diversify the risk, that is, they will not put all their eggs, in this case the dollars, in one bank. The main banks in the square will have to accommodate, in in the near future, some customers will no longer use SB. It’s a boon to the competition, said one expert. By the way, last week, when the BM came to emphasize that the suspension of the SB encompassed the entire exchange market, the regulator guaranteed that the market would not be affected as the operations of the SB were being taken over by other operators. “Of course it’s not the end of the line for the SB, but the exchange inhibition is already a severe punishment, as the loss of dominant position could represent tens of millions of USD”. The idea that the market will not be affected due to the assumption, by the competition, of the operations of the SB (45 percent of the foreign exchange market and the main bank for deposits in USD) being underway is debatable. And there are those who already notice some changes in exchange rates. But, roughly speaking, there are operations that depend on the “trust” factor. For example, inventory credit operations, on which some industries depend, take time to set up. Three months at least. On the other hand, it is not without due diligence that a bank sets out to issue letters of credit to a new customer. In a way, foreign transactions will go through a difficult phase because this is a market preference domain for the SB. The transfer of accounts will take time and the credibility of the banking system will not go unscathed. (MM) Source: Charter of Mozambique
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