Postbank: SA’S first state bank?
As a completely functional and profitable entity, the bank ticks all the boxes of a muchneeded state bank
There have been calls from numerous quarters, including political parties, over the years for the establishment of a state bank. On record as being in support of the idea is our finance minister Tito Mboweni, as far back as 2014, while more recently President
Cyril Ramaphosa expressed support for a state-owned bank in order to create more access to funding. The EFF’S Floyd Shivambu has also been a frequent proponent of a state bank.
Unlike a reserve bank, a state bank does not control monetary policy, but does provide commercial banking services. Critically, many of them prioritise financial inclusion, providing finance and transactional services to previously unbanked individuals at an affordable rate. It’s a market segment that most commercial banks — driven by a profit motive — tend to avoid. State-owned banks, on the other hand, tend to be driven by a developmental agenda and a need to create greater financial inclusion.
Is the SA Post Office’s (Sapo) Postbank a solution to these calls? CEO Mark Barnes certainly thinks so as he has recently written that Postbank is the ideal launchpad for a mega state bank.
Postbank, a wholly state-owned entity and a division of Sapo, has traditionally been a deposit-taking institution only, but legislation promulgated in 2010 made it possible for the organisation to apply to become a fully fledged bank in
June 2017.
In July 2016 its first level application to establish a fully fledged bank was approved by the Reserve
Bank. “We still have a few legislative hurdles to get through and we’re waiting for the Bank Act to be amended, which will depend on parliament’s calendar,” says Zamachoncho Chonco, acting chief financial officer of Postbank.
Postbank, she says, is in an ideal position to act as a state bank given that it is already servicing the historically unbanked, has a strong balance sheet — particularly in comparison to some of the smaller entrants into the market — and sound liquidity.
With representation in each of Sapo’s 2,400 branches and service points across the country, Postbank has been a key element of Sapo’s ability to distribute social grants.
Prior to being granted the distribution of the SA Social Security Agency (Sassa) grants, Postbank was already doing around 20-million transactions a month with a net asset value of about R3bn.
Sapo CEO Mark Barnes has in the past been quick to point out that Postbank is a completely functional and profitable entity which has largely been insulated from the operational challenges facing the post office.
The acquisition of the Sassa business has been a step in the right direction for Postbank, says Postbank acting MD Shaheen Adam. “Not only does it give Postbank access to LSMS one to five but it allows us to position ourselves as a supplier of government citizen services.”
This is a market with a large proportion of individuals who are defined as unbanked — individuals with no access to banking services — and a particular focus of Postbank is to provide this sector of the market with banking services.
There is also a significant under–banked market in the country, both small enterprises and individual customers that Postbank has earmarked.
“We have been servicing this market for some time and you have to understand its dynamics to operate profitably which is why, despite several attempts, most commercial banks have resorted to focusing their efforts on more affluent customers,” says Adam.
He says this leaves the way clear for Postbank and contribute to the country’s set goals to achieve universal financial inclusion. Postbank has generated a consistent profit over the past seven years. Prior to the Sassa business, it held a capital base value of R3bn, with combined investments and deposits of R8bn.
The bank’s customer base has grown from 5.5-million customers to more than 13-million account