A Senior official with the Barclays Tanzania office has allayed fears among its customers saying money lenders in Tanzania will not be affected by the recent rate fixing scandal which the bank has admitted to have manipulated at its London head offices in the United Kingdom.
The bank’s deemed assurance comes amid fears among borrowers in Tanzania who have been shocked when news about the scandal which broke out early this month.
The bank’s acting head of corporate affairs, Tunu Kavishe has assured the public that the country’s borrowers with the bank are not affected by this uncovered interest rate fixing scam.
Elaborating, she said that the issue was primarily concerned with customers based in London and cannot be applied to sister bank offices world wide, Tanzania included.
The official said Tanzania has a better chance to inquire on reasons behind the matter related to the London Interbank Offered Rate (LIBOR). However she noted that, Barclays Bank Tanzania is strong and continues to focus on serving its customers diligently.
“Our customers should continue to be reassured that our focus will remain on serving them and that business continues as usual,” she said, elaborating that the bank has given the same reassurance to regulators at the central bank.
The bank’s customers should not worry about the scandal as there is no damage likely to be felt this side of the seas, as Barclays Bank continues to be well managed and customers’ money is safe.
Kavishe also assured people that there are no risks locally since Barclays Bank operates as an independent entity from its UK headquarters and therefore there is nothing much to worry about. The bank has a well defined strategy and clear vision and it would continue to serve its customers and clients effectively and efficiently, she emphasized.
Barclays Bank International was recently accused of falsifying LIBOR in its day to day operations among major currency traders, by providing information on artificially low rates to encourage borrowing. This placed central banks and lenders worldwide with a faulty overview of risks in the market and the rates at which money may be lent.
LIBOR rates are a London benchmark that banks may base their foreign currency lending, while local Interbank Foreign Exchange markets use other locally determined indices as benchmark for foreign exchange trading, especially base rates by the central bank and major bank rates.
Barclays’ management in its London based headquarters came under fire two weeks ago when the bank was fined $453 million by U.S. and British regulators for submitting false reports on interbank borrowing rates between 2005 and 2009.
Much of that activity originated from traders in Barclays Capital, an investment banking division which chief executive Robert Diamond who resigned amid the scandal headed before he became CEO of Barclays Bank as a whole.
Commenting on the issue, Bank of Tanzania Governor Professor Benno Ndulu recently said that such a financial scam locally would have a negative impact.
But Barclays Tanzania argues that it has tools to curb such problems and there was no way Tanzania could be affected as local commercial banking operates under different market conditions.
“It is not possible here for a commercial bank to collude in fixing interbank interest rates contrary to regulations because in Tanzania rates are normally set through guided negotiations, while in Europe then rate is set by a competitive process,” he stated.
Barclays’ customers here and those of other multinational banks have no reason to worry because under Tanzania law, financial institutions operate as separate entities from the parent companies, the governor indicated.
A Dar based economist Sylvester Mawala told this paper this week that it is impossible for the banks to manipulate inter-banking lending rates because in Tanzania there is a big gap between lending and deposit rates, while in Europe there is small margin between lending and deposit rates.
Hence the Barclays scandal would not in any way affect the country’s currency exchange rate or affect local inter-banking rates as benchmarks here are based on offered rate on Treasury bills, he further noted.
Finance minister Dr. Wiliam Mgimwa told the National Assembly on Thursday that the bank regulator (Bank of Tanzania) was tasked with ensuring that laws of the land as set out regulations governing the financial market are observed.
The minister said his office had no reports of any bank engaged in malpractices relating to in interest rates as was the case for Barclays International.