The road to StanChart’s exit

SINCE the 2000s, Standard Chartered Bank (StanChart) has been “fading away” from Zimbabwe.
And following its April 2022 announcement to exit seven markets, including Harare, there have been a handful of suitors — including ZB Financial Holdings, a consortium of ex-bankers and Afro-American behemoth Vista Holdings — vying for its local assets, but John Mushayavanhu’s group has had the final say.

Standard Chartered regional chief executive officer Africa and the Middle East (AME) Sunil Kaushal (left) and FBC Holdings chief executive John Musha.yavanhu shaking hands during the signing ceremony in Harare.

While the chief executive of FBC and his regional StanChart counterpart Sunil Kaushal have said “regulatory approvals were still pending” for the 100 percent acquisition of the centuries-old bank’s Zimbabwean business, the former believes the purchase will enable his institution “to consolidate its market share, customer base and competitiveness in a rapidly changing banking landscape”.
In 1996, Zimbabwe was experiencing economic challenges due to hyperinflation, political instability, and international sanctions. Despite these challenges, StanChart continued to operate in the country and provide financial services to its customers.
The group last year said it was leaving Zimbabwe to “cut costs” but there are several reasons why Standard Chartered may have decided to exit.
The decision does not appear to have been made on the spur of the moment, but rather as a result of a long-term strategic review of the bank’s activities in the difficult economy.
During its time in the country, the bank had its fair share of ups and downs.
The bank was rocked by several industrial actions. In January 1999, the bank was ordered by the Employment Council for the Banking Undertaking to reinstate 388 workers it had dismissed in 1995 for striking for higher pay and a profit-sharing bonus.
In 2000, it merged its Mhangura and Chinhoyi branches.
In March 2001, StanChart’s former employees resolved to establish a trust fund to meet their needs.
That same year, it was ranked the country’s largest commercial bank by the Reserve Bank of Zimbabwe. It then had a balance sheet of $38,2 billion.
StanChart broke into the insurance business by launching Bancassurance in October 2001. In December 2001, the government cancelled the banking licence of Standard Chartered Merchant Bank, which was a division of StanChart.
A status report on Zimbabwe’s banking industry for the quarter ended September 2001, but updated January 2002, showed that StanChart’s assets were pegged at $52,4 billion, while Barclays Bank of Zimbabwe, in second position, had $43,1 billion.
StanChart closed its Old Mutual Centre branch and merged it with the Africa Unity Square branch in July 2002. It sold other branches situated in smaller towns to Royal Bank.

In 2003, the bank was hit by a strike by its workers, who were demanding better salaries and working conditions. The strike lasted several weeks, causing disruptions in the bank’s operations.
In 2012, StanChart was again hit by a strike by its workers, who were protesting against the bank’s decision to retrench some of its employees. The workers accused the bank of not following proper procedures in the retrenchment exercise.
In 2018, StanChart was once again hit by a strike by its workers, who were demanding better salaries and working conditions. The workers accused the bank of failing to pay them competitive salaries and benefits compared to other banks in the country.
These industrial actions have had a negative impact on StanChart’s operations and reputation. The bank has had to deal with disruptions in its services and a loss of business due to these strikes.
However, according to reports from 2016, StanChart had closed several branches in the country due to economic challenges and a decline in business. The bank had also reduced its workforce as part of its cost-cutting measures.
The bank’s brick-and-mortar branches declined from 37 in 2000 to only two this year.

Ralph Watungwa (RW), Stanchart Zimbabwe’s chief executive

“We are always evaluating how we should format our channels to deliver the most efficient service to our clients,” Lillian Hapanyengwi, StanChart’s head of corporate affairs and brand and marketing, told The Financial Gazette.
“We have leveraged the growth of digital banking by investing and enhancing our mobile and online infrastructure.”
Zimbabwe’s economic and political environment has been unstable for many years. The country has been facing hyperinflation, currency devaluation, and political instability for decades. This has made it difficult for foreign companies to operate in the country and maintain profitability. StanChart faced challenges in repatriating profits due to foreign exchange shortages and strict capital controls imposed by the government.
The bank faced regulatory challenges in Zimbabwe. The Reserve Bank of Zimbabwe (RBZ) had imposed stringent regulations on foreign banks operating in the country, which some analysts say made it difficult for StanChart to operate profitably. For instance, RBZ required foreign banks to hold a minimum capital of $100 million, which was beyond the reach of most foreign banks operating in Zimbabwe.
StanChart’s operations in Zimbabwe were relatively small compared to other markets where it operates, which made it difficult for the bank to achieve economies of scale and maintain profitability.
StanChart’s decision to exit Zimbabwe was part of its global strategy to focus on profitable markets and streamline its operations. The bank had already exited several other African countries, including Ghana and Sierra Leone, as part of its restructuring plan.
Because it processed transactions for state-owned companies and people who had been sanctioned, Standard Charterd Bank plc was fined US$18 million in 2019 by the US authorities for breaking the country’s sanctions on Zimbabwe.
Honour Mkushi, former StanChart chairperson for 27 years, told The Financial Gazette that it was unfortunate for StanChart to leave Zimbabwe after 130 years in the country.
“For my personal sentiments, one can only wish the new owners the best.
“For the inner merits, I think it is best that you speak to the current chairperson and executive; they are the best to comment,” he said.
In May 2022, Mubaiwa Mubaiwa was named chief executive of StanChart, with the responsibility of overseeing the organisation’s transformation.
The changeover occurred in response to Standard Chartered Bank Plc’s statement that it will be withdrawing from Zimbabwe and other markets.
Mubaiwa replaced Ralph Watungwa.
The acquisition of StanChart is poised to strengthen FBC Holdings’ position in the Zimbabwean banking sector.
Whether it was always Mushayavanhu’s dream to acquire StanChart remains unknown.
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