Banks must deal with crit­i­cism and ne­go­ti­ate

CityPress - - Business & Tenders - DEWALD VAN RENS­BURG dewald.vrens­burg@city­

South Africa’s banks have to ad­dress both the fair and un­fair crit­i­cism lev­elled at them be­fore the “cli­mate for ne­go­ti­a­tion” is lost, said Yunus Car­rim, the chair of Par­lia­ment’s stand­ing com­mit­tee on fi­nance.

In five years, it could be too late to have a “give­and-take” en­gage­ment.

This is some of what emerged dur­ing pub­lic hear­ings on trans­for­ma­tion in the fi­nan­cial sec­tor, which were held in March and May this year.

“When peo­ple are an­gry about their plight, it is all about money,” said Car­rim.

“Is it ac­cu­rate or ob­jec­tive? That is not how the world works. There were sweep­ing state­ments made by all sides.

“To us, it does not mat­ter so much if the fig­ures or views are cor­rect. What it shows is the huge dis­trust in this sec­tor, and how dif­fi­cult it is go­ing to be to move for­ward.”

The in­terim re­port stem­ming from those hear­ings was on Friday sent to the in­ter­ested par­ties that par­tic­i­pated in the process. The com­mit­tee clearly ex­pects many of them to be un­happy.

In an in­ter­view with City Press this week, Car­rim called the hear­ings the “most po­larised” he had wit­nessed in his par­lia­men­tary ca­reer, which started in 1994.

He stressed that the re­port was pre­lim­i­nary. “The view of the ma­jor­ity is that it is bet­ter that the banks ne­go­ti­ate and take trans­for­ma­tion more se­ri­ously now be­cause, five years from now, there will not be a cli­mate to ne­go­ti­ate,” Car­rim said.

“I think peo­ple are im­mensely frus­trated and an­gry at what they see as the fail­ure of banks in par­tic­u­lar to play their role.

“The stake­hold­ers that came there were ques­tion­ing the fig­ures pro­vided by the dom­i­nant play­ers in the sec­tor. They say the fig­ures are ma­nip­u­lated. There is enor­mous dis­trust in the mo­nop­o­lies,” he said.

“We think there is more trans­for­ma­tion in the fi­nan­cial sec­tor than the crit­ics make out, but less than the ma­jor play­ers say.”

He said the re­port stated that talks needed to be held with these “ex­tremely frus­trated” par­ties.

“At the hear­ings, it seems al­most as if every frus­tra­tion the par­tic­i­pants had was that they felt ex­cluded from the econ­omy as a whole, and they vented this on the fi­nan­cial sec­tor. You ob­vi­ously can’t hold the fi­nan­cial sec­tor re­spon­si­ble for the fail­ures of the econ­omy as a whole,” Car­rim said.

“We de­fined trans­for­ma­tion as more than just de­ra­cial­i­sa­tion. It is about more than just rep­re­sen­ta­tion on boards or man­age­ment. With the fi­nan­cial sec­tor be­ing as cru­cial as it is, it can play a greater role.”

He said that, in 1994, the fi­nan­cial sec­tor con­trib­uted about 7% of GDP. Now it is 29.6%.

“If you look at the mar­ket cap­i­tal­i­sa­tion of the JSE, in the 1990s it was 100% of the GDP. Now it is 220%.” The re­port comes in the con­text of the im­mi­nent re­view of the Fi­nan­cial Sec­tor Char­ter, which would set tar­gets for nor­mal mea­sures of trans­for­ma­tion like em­ploy­ment eq­uity, but also fi­nance-spe­cific tar­gets re­lated to lend­ing.

“Govern­ment is dis­cussing how to de­mo­nop­o­lise the econ­omy. When you are talk­ing about that, you are talk­ing mainly about banks. It has a high level of mo­nop­oly by any mea­sure. The own­er­ship is largely in white and for­eign hands,” Car­rim said.

The re­port’s au­thors ad­dress a dis­parate set of abuses in the sec­tor. These in­clude the un­fair re­pos­ses­sion of houses, ex­or­bi­tant fees and al­leged col­lu­sion of cur­rency traders at banks – a mat­ter cur­rently be­fore the Com­pe­ti­tion Tri­bunal.

The re­port en­dorses an in­quiry into “fi­nan­cial mal­prac­tices re­lat­ing to the re­pos­ses­sion of houses and cars, in­clud­ing their auc­tion­ing way be­low mar­ket value”.

The au­thors en­dorse the cre­ation of a state bank, in the form of Post­bank, as soon as pos­si­ble to pro­vide af­ford­able bank­ing and ex­pand fi­nan­cial in­clu­sion, par­tic­u­larly to ne­glected ru­ral areas and town­ships.

At the same time, it said one state-owned bank was enough for now.

“At this stage, it would be bet­ter to fo­cus on the Post­bank and, later, based on the ex­pe­ri­ences of Post­bank, con­sid­er­a­tion can be given to whether there is a need for an­other state-owned bank and what its spe­cific role would be com­pared with Post­bank,” reads the re­port.

It rec­om­mends that the pri­vate share­hold­ers in the SA Re­serve Bank get bought out “if it is fi­nan­cially pos­si­ble”, sim­ply to clear the air about the in­flu­ence many be­lieve these share­hold­ers wield.

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