The bully Bank of Mozambique

This is the last Zitamar Daily Newsletter of 2023. We'll be back in the new year on 8th January.

Good afternoon. On the face of it, the fining of a Mozambican bank for breaking certain obscure-sounding rules may not seem like a very interesting or telling news story (see below). However, at $2.1m, the fine imposed on BCI by the Bank of Mozambique is thought to be the highest for any commercial bank in the country, and all for violations in respect of just one client. According to the talk in business circles, the real reason for the fine is quite simple: revenge.

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In 2018, Mozambique’s electronic payment system went down for several days in a dispute between Simo, a company controlled by the central bank, and Portuguese company BizFirst, which claimed it had not been paid for the system’s software licence. Along with Standard Bank, BCI (controlled by Caixa Geral de Depósitos, a state-owned Portuguese bank) intervened, and BCI led commercial banks in brokering a solution and paying BizFirst to restore the system. They also caused the Portuguese government to intervene and speak to President Filipe Nyusi. Bank of Mozambique governor Rogério Zandamela opposed the move, seeing it as giving in to blackmail.

There began a campaign by the central bank governor against BCI and Standard Bank, beginning in 2019 when the Bank of Mozambique barred BCI’s then executive president, Paulo de Sousa, from working in the Mozambican financial sector for three years, effectively sacking him from his job. De Sousa appealed the decision, and won his appeal in 2020. Undeterred, Zandamela moved against executives at Standard Bank, banning the former chief executive and head of information technology over running a supposedly illegal payment system, which was in fact a backup to prevent the bank from getting caught out over another blackout.