Johannesburg - Business associations are increasingly banding together in calling for the establishment of black-owned banks that would cater for previously disadvantaged South Africans, but state policies remain a hindrance to this aspiration.
Also, statements such as “only a banker can buy a bank”, might be seen to indicate that the country has no strategy to transform the financial sector to pave the way for black people to establish banks.
Among those who are not happy with the banking status quo is George Sebulela, the president of the multiracial South African United Business Confederation (SAUBC). Sebulela is also the former chairperson and secretary-general of the Black Business Council (BBC).
“It has always been on the cards to say one of the key priorities was to establish a majority black-owned bank. The reason for that was because there was a view that the bank must be typically a high-risk bank, meaning it would have a high-risk appetite to fund black businesses and to fund high-risk transactions,” said Sebulela.
He said he was concerned about the government’s policies that were detrimental to the aspirations of black people to acquire their banks. This is while the established banks do not seem interested in assisting the formation of a black-owned bank.
“The challenge is that there are not many black individuals who have the amount of capital that is needed for this … because the truth of the matter is that for any transaction you need to invest a lot of money. In the financial services industry, there is what we call minimum capital adequacy so in a case – as you have seen with VBS – you have to fulfil the obligation of the depositors, you can do that," he said.
"That threshold has been made so high by the SA Reserve Bank (SARB) and it does not compromise on what the minimum capital adequacy should be,” Sebulela said.
This minimum capital adequacy, according to Sebulela, is what a person who wants to acquire the bank would have to have upfront before he or she were to start investing money into that business.
“The conditions, the requirements, and the policies make it too stringent. There is serious red tape around the transformation of the financial services sector. The requirement … to do that particular business limits black business people's access to that industry," he said.
The main intention of black business owners to enter the banking industry is to overwhelmingly transform this industry, which currently seems rigid and unwilling to accommodate black people. As a non-racial confederation of businesses and industry sectors, SAUBC pledged to continually support the vision of black-owned banks “if indeed it is going to assist and help to fast track the growth of the previously disadvantaged to participate in the mainstream of the economy”.
BBC and Sekunjalo Investment Holdings (SIH) have also seen the need for black-owned banks. They both talked about black people either establishing their banks or buying already existing institutions. Sekunjalo had its sights set on Ubank and was willing to spend R250 million recapitalising the workers’ bank, which is currently under curatorship and soon to be sold to African Bank Holding Limited (ABHL).
The BBC has, for years, been talking not only about building its bank but was also considering buying ABHL. Ubank, curator Zola Beseti turned down Sekunjalo’s request to help recapitalise Ubank for a minimal stake by saying: “Only banks registered in terms of Section 54 of the Banks Act must be invited to bid for the assets and liabilities of Ubank.”
He said he had been advised on this by the SARB’s Prudential Authority in the interest of the depositors of Ubank and given the capital position of Ubank. It is not clear whether this statement was only about Ubank or it is a general practice as South African Reserve Bank (SARB) spokesperson Ziyanda Mtshali is yet to respond to a request to clarify this.
It has since been announced that ABHL would soon be the new owner of Ubank, however, its trustees, according to reports, have expressed deep dissatisfaction with the decision to sell the majority stake for R80m. ABHL is currently owned by several commercial banks with a combined share of 25%, Employee Pension Fund (GEPF) controls 25% and SARB with 50%. SARB, meanwhile, has decided to list its 50% shareholding in ABHL after concluding that none of the interested investors was suitable to acquire its stake.
BBC chief executive Kganki Matabane, according to a 2020 report posted on its website, said the BBC was considering either forming its bank or acquiring ABHL. He has not responded to written questions seeking an update on the council’s aspirations. However, Cosatu spokesperson Sizwe Pamla is opposed to the SARB selling its 50% share of ABHL.
He said the federation had always been advocating the state bank inclusive of both the private sector and state institutions with the latter being the majority shareholder. In the case of ABHL, both GEPF and SARB own a combined 75% stake.
“The mandate of the ABHL should be reconfigured in such a way that it then pursues the developmental agenda of a state bank. We already have the state bank if you look at the composition of the African Bank. The issue of these banks owning 25% is not an issue when something like 75% of the ownership is in the hands of the state,” said Pamla.
When contacted for comment on the issue of black people having their bank, Business Unity South Africa (Busa) declined to comment and instead referred questions to the Banking Association of South Africa (Basa), which is a member of Busa.