Offshore Online Banking Guide – Critical Information You Must Know

The past two weeks of 2003 saw interest rates soar near 900 percent p.a., together with the RBZ watching helplessly. The RBZ had the tools and capacity to restrain these speeds but nothing has been done to facilitate the situation. This hiking of interest charges wiped out almost all of the bank’s income made over the year. Bankers normally rely on treasury bills (TBs) since they are easily tradable. Their return had been great until the interest rates skyrocketed. Consequently bankers were borrowing at higher rates of interest compared to treasury bills could cover. Bankers were put in the uncomfortable position of borrowing double glazing kent expensive money and on-lending it cheaply. An example at Royal Bank was an entrepreneur who offered $120 million in December 2003, which by March 2004 had climbed to $500 million due to the excessive rates.

Even though the cost of capital was now at 900% p.a., Royal Bank had only increased its interest rates to just 400% p.a, meaning that it had been financing the customer’s shortfall. Nevertheless this customer could not cover it and just returned the $120 million and demonstrated that he had no ability to pay back the $400 million interest fee. Many Catholics accepted this prophecy because they thought it was a temporary disorder perpetuated from the inability of an acting governor to make bold decisions. Bankers considered that once a substantive governor was sworn in he’d control the interest rates. Much to their dismay, on assuming the governorship Dr. Gono left the prices untamed and thus the situation worsened. This situation continued up to August 2004, resulting in considerable strain on entrepreneurial bankers.

On reflection, some bankers feel that the central bank deliberately increased the interest rates, as this might allow it to restructure the financial services industry. They argue that during the money crisis of the last half of 2003, bank CEOs would meet often with the RBZ in an effort to find solutions to the emergency. Retrospectively they assert that there is evidence suggesting that the current governor though not appointed however was already in control of the RBZ operations during this time frame and was responsible for the untenable interest rate regime