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Impact of riots on banks and what rebuilding SA should look like

‘We have to work on many ways to increase the level of sophisticated financial inclusion, so that we reduce the amount of cash in our economy’: Richard Wainwright – Investec Bank CEO and Basa chair.

FIFI PETERS: We are going to be having a conversation about the impact that the riots and the looting of late have had on the banking industry. At the last count around 1 400 ATMs had been vandalised and around 300 branches had been closed.

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For the latest update, as well as a conversation of what rebuilding South Africa should look like, I’m joined by Richard Wainwright, CEO of Investec Bank and the chairperson of the Banking Association of South Africa. Richard, good evening.

RICHARD WAINWRIGHT: Good evening Fifi, and thank you for having me on your show.

FIFI PETERS: Thank you, sir, for coming through and also opening yourself up to receiving some questions. I just wanted to remind listeners they can tweet away should they have anything to ask you. But I see that the president had a meeting with business leaders today. I don’t know if you were in on that meeting or if you heard anything about what he was saying regarding the update to security issues.

RICHARD WAINWRIGHT: There was a meeting, Fifi. Unfortunately I wasn’t at that meeting. Many of my colleagues from the other banks and some of my investor colleagues actually were there. The chairman of our bank was also there. I’ve had some initial feedback.

I think this is really about how government, together with the social partners – being labour, business and community groupings – actually respond to this crisis and how we work together. From a private-sector perspective, including the banks, we’ve been actively engaged with numerous government ministers throughout the weekend and the latter part of last week. So there are ongoing engagements around the immediate short-term needs, being security and the like, physical security and food security and medical security, to such things as access to cash. And then more toward the medium to longer term, how these partners work together to get us back on the growth path.

FIFI PETERS: Before we get there, Richard, before we get to the medium to long term, in some of his latest addresses the president – I think it was Friday last – did announce that there’s been a lot of destruction out there and there’s going to be a lot of support needed to rebuild in the short term. He made reference to a support package that could be forthcoming for small businesses, particularly those that don’t have insurance. I’m wondering if some of your engagements with government have included details around that support package that you can share with us at this stage.

RICHARD WAINWRIGHT: The details have not been discussed with us. Clearly that sector of the economy does need a support package, particularly the very small SMMEs and the informal sector, which ordinarily would not qualify for a bank loan and the like. That sector of the economy is going to need a lot of support and it’s going to have to come from government directly. I haven’t engaged with National Treasury yet. It’s unclear how that response is actually going to be effected. Unfortunately I can’t give you any more information on that.

For the bigger companies, and those clients of banks, clearly each bank is going to do what they can to support their customers, whether it be immediate access to loans or just by helping them complete the various forms and processes that they’re going to need to follow to get Sasria claims in. I’m sure the banks will all play their roles in supporting their clients in doing it.

FIFI PETERS: Would it be ignorant for me to assume that of some of the ATMs that were vandalised very few were Investec ATMs? Given that the destruction we saw was located mainly within the township economy and distribution centres, would it be ignorant of me to say that Investec wasn’t really impacted, or was there an indirect impact on your business through the impact on your clients who might have exposure in these areas that were looted?

RICHARD WAINWRIGHT: Fifi, as you probably know, Investec is not a retail bank or a mass-market bank. So we don’t own the ATM infrastructure. The larger banks in South Africa own all of that infrastructure, so they would have been directly impacted from that perspective. How it’s impacted Investec specifically? We have clients that play in that part of the economy – whether they be retailers, medium-sized businesses; we bank many, many land and property owners who’ve had the assets destroyed. It’s early days yet to determine the extent of this damage. I think each bank and each company out there is trying to determine the extent of the damage caused. From talking to our economists, we think that the initial impact of this is going to be about 0.5% on GDP. And, as you know, we were struggling to come out of the Covid pandemic.

So the assessment of the overall damage for each bank and each company is going to take some weeks and months to determine.

FIFI PETERS: Richard, what do you think the lessons from this latest episode that has happened in South Africa should be?

RICHARD WAINWRIGHT: I think we’ve all got to sit back as South Africans and say to ourselves, all the social partners here, that the kind of environment we’ve got around unemployment, the extent of poverty and inequality in South Africa, is just not sustainable. There are many things that can spark these kind of events. I think the president has told us that this clearly was an orchestrated and well-organised series of events that took place – but they could have been anything else. So I think all of us as social partners have to sit back and say: how do we deal with creating an environment where we can attract investment that gives us the necessary growth, that is in principle all about people? We all collectively have to sit back and look at that. That’s the first big lesson I think we’ve learnt.

From a banking perspective, what I’ve been saying to some of my colleagues – because of the cash crisis that we’ve seen and all of our banks having to work together with some of the retailers, the actors as dispersers of cash as well – is that clearly it’s a major weakness in our economy that we’ve got such a large extent of transactions that take place in the form of cash.

We have to work on many ways to increase the level of sophisticated financial inclusion, so that we reduce the amount of cash in our economy. Not only will it make it safer, but it will actually make it cheaper for consumers.

Then I think there are some lessons for government too. I think the government, led by the president, has clearly said that we weren’t prepared as a country for this kind of uprising that was done in an orchestrated way.

And then I would finally say that, collectively with government, one of the ways you have to deal with the unemployment is on the education front. We have to have a massive drive to educate people who can take up full and proper employment in a growing economy.

FIFI PETERS: Richard, on the cash crisis that you made mention of in the wake of the riots – I imagine it’s also in reference to the destruction or vandalism of the ATMs that took place – quantify for us how big this cash crisis was.

RICHARD WAINWRIGHT: Well 1 400 ATMs taken out – clearly that’s had a big impact. The banks, together with ATMs and other point-of-sale devices, provide fast payments to over 11.5 million south Africans. So access to that type of cash is very important for the functioning of our economy. What we are doing as an industry at the moment is working very closely, again, with the ministers to ensure that the cash from the cash collection points can get into those ATMs that are working. I’m sure each of the major banks have plans in place to repair and replace their ATMs, and to work with the other partners, the point-of-sale partners, to distribute this cash. The feedback I have been getting over the last few days is that that is coming together. I’m sure there are places in KZN, in particular, where there are problems, but we are working day and night to ensure that that cash is available.

FIFI PETERS: Richard, thank you so much for your time and for joining the show. Richard Wainwright is the CEO of Investec Bank, and also the chairperson of the Banking Association of South Africa.

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CEO’s from their role & position, will always try to put their positive hat on.

“How would rebuilding SA look like?”

It’s more of a short-term upward/recovery trend, within SA’s long-term strategic downward decline (towards economic insignificance).

Here’s lyrics extracted from a great 1983 song:

“The grabbing hands grab all they can
All for themselves – after all”

“Everything counts in large amounts”

“The graph on the wall, tells the story of it all”
“The lies and deceit gained a little more power…”

DEPECHE MODE

Who needs cash if we can loot freely ?

Ahem, wrong, Mr. Wainwright.

To prevent state capture the banks froze all Gupta bank accounts.

To prevent state failure the banks must freeze all ANC bank accounts.

Zuma = state capture

Ramaphosa = state failure

Beware the war on cash. It is a war on freedom.

There’s nothing more expensive than dealing with the poor.

End of comments.

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