ECOBANK Zimbabwe Limited commenced commercial banking activities this week following approvals from the Reserve Bank of Zimbabwe. Ecobank, formerly Premier Banking Corporation Limited, had applied for the conversion of its merchant banking licence to commercial banking to fit the bill of its parent Ecobank Transnational Incorporated.
RBZ said in a statement yesterday: "It is hereby notified that Ecobank has been authorised in terms of Section 16 of the Banking Act to commence the business of a commercial bank with effect from May 15, 2012."
Ecobank acquired 70 percent of Premier Finance Group in January last year for US$10 million.
Premier, before its takeover by Ecobank, focused on corporate, private and investment banking.
Incorporated in Lome, Togo, Ecobank has footprints in 30 African countries.
Ecobank is also listed on the stock exchange in Accra, Lagos and the West African Economic and Monetary Union.
The bank has more than 180 000 local and international institutions and individual shareholders.
Shareholder funds are estimated around US$1,1 billion and has total assets of about US$9,1 billion.
Analysts yesterday said Ecobank will bring in competition to existing players on the market and expected to leverage on its existence in 30 African countries to secure funding for the Zimbabwean market.
The Zimbabwean market is constrained by serious liquidity challenges and well-capitalised banks have got an advantage over others.
"Competition is good in the banking sector. If there is competition for clients and they strive to give the best products for less," said one analyst.
However interest rates on deposits have remained low and borrowing has remained expensive, making it impossible to borrow for productive purposes.
Deposits have also remained low as depositors shun banks due to high service charges and lack of confidence.
Zimbabwe has got a total of about US$4,7 billion in circulation and it is believed that about US$2,5 billion could be circulating outside the banking system.