Support for state-owned bank

Banking Association of SA Logo
Banking Association of SA Logo

The banking industry has no objection to the introduction of the state as a potential owner or operator of competitors as long as they are regulated in the same way as other banks.

This was according to the Banking Association of SA (Basa) during parliamentary finance committee hearings on the Financial Matters Amendment Bill on Tuesday.

“We support all new banks in SA insofar as they are subject to similar legislative and regulatory supervision to ensure a level playing field,” Basa strategic projects general manager Gary Haylett said.

Basa approved of the fact that conditions and limitations would be placed on which state-owned enterprises would be eligible to establish a bank.

However, Haylett said Basa was concerned about the funding mechanism for the proposed bank, challenges facing state-owned companies and potential conflicts of interest.

“We place reliance on the SA Reserve Bank and the Prudential Authority to discharge their responsibilities and objectives without fear or favour in their respective supervision of regulated financial institutions, including state-owned banks.”

The bill states that only a state-owned enterprise approved by the minister and with the concurrence of the minister can apply for authorisation to establish a bank.

The application will have to include a declaration by the auditor of the state-owned company that for the 24 months immediately preceding the date of application the assets of both the company, its holding company and the holding company of the holding company exceeded their liabilities.

Cosatu parliamentary co-ordinator Matthew Parks said the union federation supported state-owned enterprises being granted banking licences, which would open up the banking sector to competition.