First Rand chair debunks myths
ATTACK ON BANKS: CLAIM THEY’RE ‘ANTICOMPETITIVE’ AND ‘REFUSE’ TO TRANSFORM
Banks are national assets … they should be preserved by our government, not undermined – Laurie Dippenaar.
FirstRand chairperson Laurie Dippenaar has launched a strong bid to debunk myths perpetuated in a “significant attack” on banks, “with the worst assaults emanating from a certain group of individuals and companies whose bank accounts were closed, and those in government who supported them”.
In First Rand’s annual report, he said the banks’ actions unleashed “fury” from certain government quarters and, worryingly, precipitated an attack on the SA Reserve Bank (Sarb) and the finance minister, and hinted at further attacks on the constitution.
Myth one: banks are ‘too big’ and anticompetitive
Dippenaar agrees with Sarb deputy governor Kuben Naidoo’s sentiments expressed in March that an advantage to having four large banks “is there’s more resilience in the event of a financial crisis. Though market dominance is relevant for competition, it is not necessarily indicative of the ‘absence’ of competition”.
New banking licences have been issued since 1995 to various banks, including Capitec, and three new licences are likely to be ratified this year. “This does not signify a lack of competition or high barriers to entry – this looks healthy,” Dippenaar said.
One reason the big four dominate SA banking “is that over the past two decades they have absorbed the financial fall-out of second-tier bank failures”. This was the case in the curatorship of Saambou, BOE and African Bank Investments (Abil). He said the big four banks’ size and scale is key to financial and economic stability and public confidence. “This does not mean competition is killed off in the process,” he said, adding community, specialist and fintech banks operate successfully, but don’t have the balance sheets to rescue failed firms or lend billions to state-owned en-terprisess, renewable energy programmes and BEE deals.
Myth two: banks ‘refuse’ to transform
Dippenaar said the March public hearings, run by the standing committee on finance, were a positive exercise and “the sector gave a good account of itself”. He added: “We recognise we have much more to do, but we also ask for fair recognition of our intent and what we have contributed.”