Angola’s Access to Dollars Dries Up as Foreign Banks Halt Supply

LUANDA (Capital Markets in Africa) – All foreign banks have stopped providing dollar clearing in Angola, which vies with Nigeria as Africa’s largest crude oil producer, according to court papers filed in South Africa by Standard Bank Group Ltd.

A single European bank that had been providing the service, which wasn’t identified in the submission, has pulled out of the country, Standard Bank said in the documents, which were submitted to the Pretoria High Court on Wednesday. The Johannesburg-based lender’s unit in the country is also being affected by the dollar shortage, it said.

The loss of correspondent banking relationships has pushed up the cost of doing business in Angola and could further weaken the financial system, which is already struggling with lower oil prices, weak profitability and high levels of non-performing loans, according to an International Monetary Fund report dated June and attached to Standard Bank’s filing. Angola’s central bank now primarily uses euros when it intervenes in foreign-exchange markets, the IMF said.

Amelia Borja, a spokeswoman for the central bank in the capital, Luanda, didn’t answer calls to her mobile phone seeking comment.

Court Battle
The lack of clearing banks for dollars has exacerbated a dollar shortage that began as the country began forcing oil companies in 2012 to pay costs in the local currency, the kwanza. Standard Chartered Plc in December ended its dollar services in the country, days after Bank of America Corp. was said to have halted supplies.

Angola ranks among the 20 most corrupt countries in the world, placing 163 out of 175 nations in Berlin-based Transparency International’s 2015 Corruption Perceptions Index, making it difficult for foreign lenders to comply with anti-money laundering and corruption rules.

Standard Bank’s court submission was made in relation to a case brought by South African Finance Minister Pravin Gordhan arguing that he doesn’t have the right to intervene when domestic banks shed customers. It concerns companies controlled by the Gupta family whose close relationship with President Jacob Zuma and some cabinet ministers contributed to the country’s largest lenders shutting their bank accounts.

Standard Bank was pointing to Angola and countries such as Liberia and Guinea, where foreign banks have also pulled out of supplying dollars, as an example of the dangers for a country of being perceived as at risk of violating anti-money laundering laws.

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