Bonus of bank’s clear and concise reporting

Every year, a self-appointed organisation called the South African Rewards Association (Sara) gives an award to the listed company it believes has the best remuneration report.

The award makes no judgment on the size of the remuneration packages involved, but focuses on compliance with the King code and how clear and concise the remuneration philosophy and application is.

Clear and concise are terms that are rarely associated with remuneration reports, largely because no one in the remuneration industry, including consultants and remuneration committee members, wants the public to understand much of what is going on.

This poses a challenge to the judges, but so far it seems to be one they’ve easily sidestepped. In the recent past, they have given awards to the extremely dense reports generated by Standard Bank and MTN.

Among the current batch of annual reports, they need look no further than Capitec for an example of clear and concise reporting. Capitec is the standout winner for the simple fact it is possible to work out (roughly) what their top executives stand to pocket in the nonguaranteed portion of remuneration by following the share price.

Capitec’s reporting is so effective, it should not just be given the Sara prize, it should be the legally required standard adopted by all remuneration committees. That, of course, will not happen.

Dense, complicated reports ensure no chance of comparison and allow remuneration committees to continue plundering shareholders.

While Capitec’s reporting is excellent, its remuneration policy is not. For a bank that makes so much of the importance of its customers, it’s rather strange the policy doesn’t take customer relations into consideration.

What it should do is link the payment of bonuses to the number of complaints being investigated by the banking ombud. What a winner that would be.

Postbank’s determination to provide loans to a largely untapped market is refreshing. Post Office CEO Mark Barnes is adamant that spaza shop owners who — outside the purview of traditional banks and the formal economy — are prudently managing profitable outfits, should be given access to finance.

Similarly, Barnes says a homeowner letting a house for which they have no title deed should be considered to own a bankable annuity.

If we are to grow the middle class and expand the tax base, we need to think differently, says Barnes. But lending regulations will be a challenge.

The rules dictate that the lender must secure three months of payslips and three months’ bank statements, or similar credible verification of affordability. That could be a problem for Postbank.

Certainly, clothing retailers felt credit sales tumble following the implementation of these new rules in May 2015. The rules effectively prohibit them from selling an item of clothing on credit without demanding bank statements and salary slips – something no casual shopper takes with them to the mall.

Still, Barnes’s passion to effect financial inclusion through Postbank is welcome. It expects its banking licence from the Reserve Bank within months and hopes to start extending loans later this year.

We’ll watch this space.