SA banks caught up in alleged financial shenanigans in Namibia
REPUTATIONAL risk has become something of a buzzword in business and particularly in banking and as previously reported, South African banks are actually the architects of their own reputational risk.
Investopedia, the world's leading source of financial content on the internet, says reputational risk can arise from the actions of errant employees, leading to instances of egregious fraud or massive trading losses.
Giving an example from the US, Investopedia says: “Reputational risk exploded into full view in 2016 when the scandal involving the opening of millions of unauthorised accounts by retail bankers and encouraged or coerced by certain supervisors was exposed at Wells Fargo.”
In that instance top executives were forced out or fired. Regulators subjected the bank to fines and penalties, and a number of large customers reduced, suspended, or discontinued altogether their business with the bank.
Wells Fargo's reputation was tarnished, and the company has had to rebuild its reputation and its brand.
When it comes to reputational risk it would appear that some South African banks have recently been caught up in financial shenanigans that don't reflect too well on their reputations in the neighbouring Namibia.
In March this year the Namibian Competition Commission (NaCC) initiated two investigations into its banking sector on account of discriminatory practices.
The NaCC said that the first investigation related to the alleged historic
fixing of interchange rates by commercial banks through the Payments Association of Banks (PAN).
Those being investigated include PAN itself, Nedbank Namibia, Standard Bank, FNB, Banco Atlantico Europa-Namibian branch, Bank BIC Namibia, Bank Windhoek, Letshego Bank Namibia, Nampost Savings Bank and Trustco Bank Namibia.
The second investigation is focused on the Bankers Association of Namibia, FNB, Bank Windhoek, Standard Bank and Nedbank for possible discriminatory conduct in the provision of fire insurance for home loans; unfair pricing of certain ancillary services; and discrimination in the provision of home loans to clients belonging to other banks vis-a-vis their own clients.
The news of these investigations came during the same week in March that one of Namibia's leading newspapers, The Namibian, reported: “Nedbank Namibia has suspended its retail and business banking executive, Richard Meeks, for alleged improper conduct.”
Nedbank spokesperson Sarah Mautjana said the bank had taken note of the fact that the NaCC had initiated investigations in respect of several banks and related stakeholders in Namibia.
“We have always been guided by our ethics in treating our clients fairly, and as the banking sector we operate in one of the most regulated business sectors.
“This amplifies the inherent checks and balances governing the industry in their pursuit of business.”
She said Nedbank was ready to engage with the relevant industry bodies and the NaCC in good faith with the aim of resolving the matter.
“We remain guided by the principles of customer centricity that we as Nedbank subscribe to and hold in high regard,” Mautjana said.
“Nedbank can confirm that Richard Meeks remains suspended pending the completion of an internal process. Due to employee confidentiality, we are unable to share any more information.”
Standard Bank spokesperson Ross Linstrom forwarded the following statement from Standard Bank Namibia: “NaCC issued a notice to investigate alleged uncompetitive practices within the commercial banking sector in Namibia. Standard Bank Namibia would like to assure our clients and valued stakeholders that it conducts its business within the highest international governance standards and in compliance with all regulations governing the banking sector.”