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Does SA need (another) black bank?

Calls for Reserve Bank to relax the requirements for banking licences would put depositors’ money at risk.
The country already has several black-owned banks. Image: Shutterstock

Nonkululeko Gobodo, hailed as South Africa’s first black female chartered accountant and a founding member of one of the country’s largest accounting firms, recently called on the South African Reserve Bank (Sarb) to relax its requirements for new banking licences – to make it easier to start a black bank.

As long as the country’s central bank keeps its stringent requirements for a bank licence in place, most black people will remain beggars, she says, adding that the current economic structure makes black people feel unwelcome when they walk into a bank to ask for help.

“It’s like we are living in this first-world country that is perfect. So the banking sector must be perfect and comparable to the world. As long as we have things like that, how are we ever going to get black people to stop begging unless we have our own black banks?” she remarked at a summit of the Black Business Council a few weeks ago.

SizweNtsalubaGobodo founder Nonkululeko Gobodo. Image: Moneyweb

“We need a framework that’s going to open the sector to black people,” Gobodo added.

Her comments raise an important question: If the colour of shareholders is that important, why don’t people know that SA has several black-owned banks?

An analysis of the shareholding of South African banks shows that there are several black banks. For example, African Bank and TymeBank have largely black shareholders, while the smaller Ubank and the Ditsobotla Cooperative Bank are wholly owned by blacks.

TymeBank

Mining magnate Patrice Motsepe started TymeBank a few years ago, with African Rainbow Capital owning nearly 74% of the bank at the date of its latest annual report.

It has changed since then, with the introduction of private equity funds and Philippine and Chinese investors. However, it is uncertain how these new investors may have changed the bank’s colour: Does the government’s classification of Chinese people as black extend to other Asians as well?

Read: TymeBank gets R1.6bn injection from global partner

There is no doubt that TymeBank is focusing on building a strong black bank with a black client base, as evident from its partnership with the Zionist Christian Church (ZCC). When announcing the partnership in 2020, TymeBank noted that the ZCC has nine million members in SA, six million of whom are adults.

TymeBank announced that it had reached a milestone of three million customers in February, and is signing up as many as 5 000 new clients per day.

The interim report to the end of February showed that deposits amounted to R1.7 billion.

It is important to note that TymeBank’s success and growth over only two years did not rely on any special treatment from regulators.

African Bank

African Bank can be considered a black bank too. Its history proves that strict regulatory oversight trumps the relaxation of regulations.

African Bank’s largest shareholders, the Reserve Bank with 50% and the Public Investment Corporation (PIC) with 25%, are both linked to the government. Most of the members of the Government Employees Pension Fund (GEPF) and the pension money in the fund are probably black after more than 25 years of affirmative action in government structures.

Read: Kennedy Bungane appointed new African Bank CEO

African Bank COO George Roussos told Moneyweb that it is important to note that the Reserve Bank has publicly stated that it was never its intention to hold its stake in the bank indefinitely, particularly because its shareholding creates a potential conflict of interest between its role as a regulator of African Bank and as the majority shareholder of African Bank Holdings Limited.

In fact, the Reserve Bank recently asked for expressions of interest to start the process of disposing its shares. Thus, it is not unreasonable to think that black investors would be preferred as bidders.

The other 25% of African Bank is owned by a consortium of banks that helped to recapitalise the bank after it was placed in curatorship in 2014, including FirstRand (7%), Standard Bank (6%), Absa (5%), Nedbank (4%), Investec (2%) and Capitec (1%).

It is also not unreasonable to think that these banks would be willing to reduce their shareholding and that black investors would be welcomed.

Beggars?

African Bank did not answer the question of whether bank staff make black customers feel like beggars when they walk into the bank, but the figures suggest that the answer should be no.

Roussos disclosed that more than 91% of African Bank’s employees and nearly 98% of customer-facing staff are black.

More than 80% of all employees in management positions are black.

Other banks also did not respond directly to the question. Employment figures by race suggest that black customers are more likely to be met by somebody of their own race than not. FNB says that 80% of its workforce in SA is black as defined by government, while 75% hold management positions.

In addition, 78% of clients are black, as per government’s definition of African, coloured and Indian (ACI). In terms of deposits, 43% of clients are in this group and 50% of advances are to ACI clients.

Capitec says 88% of its employees are black and 65% of employees in face-to-face contact with clients are black. However, Capitec responded that it does not keep race-based statistics for depositors and borrowers.

Standard Bank said the group considers transformation a priority, both within the organisation itself and with regards to clients and the economy at large.

Read: Ownership status of broad-based BEE trusts no longer hanging in the balance

“The bank is in compliance with Financial Sector Code targets, and plays an important role in enabling broad-based black economic empowerment (B-BBEE) and black-owned companies to grow through equity, debt lending and acquisition finance,” it said in response to questions.

“Standard Bank does not profile customers according to race. The bank adheres to the principles of treating customers fairly, so that no clients are discriminated against,” it added.

The same probably applies for most retail operations in SA, given the demographics of our population.

First responsibility to depositors?

Calls for the Reserve Bank to relax regulations, as well as regular demands calling for banks to relax lending criteria to help people, are far more important and show scant understanding how banks work.

Moreover, the matter can have huge repercussions for the banking industry and the economy as a whole.

Only FNB admitted that a bank’s primary responsibility is towards depositors.

“Primary responsibility is to protect depositor money, hence we use risk management in lending and investment practises and in accordance with regulations. Our approach to servicing clients is not defined by race,” it said in answer to questions about race.

“We lend according to risk profile, not race.”

Standard Bank responded that it does not profile customers according to race and applies the same criteria to each client when assessing credit and relief measures.

Capitec says it is a bank for all South Africans: “Our Global One account is a solution that does not differentiate clients based on demographics, but rather offers everyone the same personalised service, simplified products and affordable fees. So everyone pays the same, and all get the same great product.”

The responsibility towards depositors is without doubt most important. A bank cannot exist without depositors and their confidence in their bank.

Figures show clearly that banks lend out depositors money, and deposits would only be safe if loan criteria are strict.

A look at banks’ financial statements show that deposits and advances are closely matched

R billion Deposits Advances
Standard Bank 1 624 1 271
Absa 951 930
Capitec 119 57
African Bank 17 16
FNB 1 089 797
Nedbank 930 836

Source: Latest annual reports

Activists calling for easy bank loans and low interest rates apparently do not understand that banks cannot lend out more money than than they take in as deposits – and they have to keep ample reserves too. In addition, interest payable must cover operating costs, such as staff salaries and losses due to bad debt.

Bad decisions when granting loans always result in large bad debts, which put depositors’ money at risk. Ask Saambou, Regal, FBC Fidelity and African Bank.

The same can be said about bad investments and questionable activities. One does not need to look further than the large banks that folded during 2008 and 2009 worldwide, or the smaller VBS on home soil.

The National Credit Act is good legislation that kept depositors’ money safe, and South African banks remained solid during the global financial crisis and the Covid-19 pandemic.

Listen to Nompu Siziba’s interview with new African Bank CEO Kennedy Bungane: 

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COMMENTS   36

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“how are we ever going to get black people to stop begging unless we have our own black banks”

Customers don’t care what shade the share holders’ skin colour is. They want a good product at good value.

Statements like hers makes me wonder if she is considering going into politics

agree! people will stop begging when the ANC stops putting incompetent thieving cadres in charge and start to invest in education, skills development and create an environment conducive to economic growth. no amount of “black banks” can fix that.

Read between the lines here…….”We want Government (read tax payers) to fund this black owned bank and when it goes off the rails we want Government (read tax payers) to to bail us out again.

Check rest of Africa and show one country without a begging bowl.

South Africa could do with at least another 6 banks, but they all need to be colour blind and based on sound risk management principles.

South Africa has enough banks. The ones that crave a black bank are the crooked ANC and EFF politicians who just love soft shake down targets.

No. It’s a cartel of 5,we need more competition.

What a croc. It’s not about color, it’s about the products. The SA banks need to develop products that cater for the market. The mere fact that banks like Tyme and One are even able to attract a single client is a testament to the lack of innovative financial products in our banks.

It’s just rhetorical nonsense echoed by those who fall for the populist ideology of our politicians.
If our Gov’t would stop eating all the money and put it to better use and those within the public did their jobs, then beggars and extreme poverty wouldn’t be the norm.
Furthermore, SA used to be considered to have 1st world infrastructure, but 3rd world problems. However, today it’s just 3rd world throughout…There’s nothing to be considered 1st world when at any moment the power/water fails, buildings burn or collapse (to mention but a few), and then nothing is done to resolve these problems other than to allow the decay to continue while borrowed monies are the stolen, again!

Good for job creation only.

So many banks for such a small population and high unemployment,
some will eventually close down and the profit margins will be low.

“Race politics is the last hiding place of the scoundrel” – Lesetja Kganyago, Governor of the Reserve Bank, at the XXIII Annual Conference of the Central Bank of Chile. He was the keynote speaker on the topic of Reserve Bank independence.

The same Mr. Kganyago was part of a protest at a private school to demand that more black teachers must teach at the school. Race Politics maybe?

“Activists calling for easy bank loans and low interest rates apparently do not understand that banks cannot lend out more money than than they take in as deposits” Comments like this make me believe that the author has not yet heard of fractional lending.Nevertheless that a question is posed such as that in the headline is a sad indictment of South Africa’s non racial project. To imply that a bank whether owned by a “beige” or “brown skinned person would care about anything more than the colour of your money and your ability to pay is just politicking. The only “bank” that could afford such ideological frippery would be detached from the rigours of the market place and would be something like a state owned bank as proposed by the ANC, where their losses could be absorbed by the tax payer.

Is this all about cheap loans? Plunging the unsophisticated person into debt?

Well with VBS gone surely there is space for a “black” bank??

Go for it. Open ten if you like.

Problem is one – who do you think will fund the start up as well as the failure of the said Black Bank RSA Inc?…….taxpayers obviously. Cheapest form of working capital for any ANC backed “business”.

Does SA need (another) black bank?
Of course it does. There are many, many cadres who have not yet had an opportunity to steal money from widows, orphans and municipalities. Surely they deserve their turn at the trough.

What racist rubbish. More Africa entitlement and victim mentality instead of work. This is truly pathetic and more so that MW publishes such drivel. Sensei nails it. Africa people just cannot help playing the race card.

When that’s the only card in your hand, what else can you play?

Quote,current economic structure makes black people feel unwelcome when they walk into a bank to ask for help.

Today, in Corona time, the never existed welcome, replaced with front door authority of the nightclub kind. Arriving inside the general feeling given by staff is fear, rightly so, and long overdue.

I had thought that money doesn’t have any colour or that it is immune to racism till I saw this. This article has the same racist tone of “Do we really need another black neighbour in our white estate?”, “Do we really need another black person in our lily white management team?” basically the question is typically racist in that it asks “Do we really need another black “this” because any black “that” is of inferior quality/substance and there’s no doubt that white is supreme.” Would another Volkskas do, Meneer Kruger?

Seems that Ms Gobodo needs to write a new textbook on business. It should be all about that the fundamental principles of a business are no longer to make money for shareholders, no longer is it to service customers or to improve the lives of the community in which it operates, rather its primary objective is just to be black owned.

Black, blue, brown, white banks dont matter. Let us focus on what is not available from the market that’s needed. Just opening a bank because its owned by blacks or women is not enough. I believe it will be better to look at what is not available from the current system and focus on that as value proposition. Pushing colour card must end.

From a concerned black man.

Why do black people ask for special dispensation for their own conduct? You want a bank, well there are the rules, follow them. Look how VBS turned out – not so good with this whole concept of created, managing and storing a financial surplus for capital funding and wealth creation. Begging bowls DO NOT make banks

Its garbage like this that holds this country and its people back. Until we stop painting entire groups with one brush we will never progress. This is such a broad and sweeping statement and totally meaningless in today’s South Africa. We now have various economic strata and there are a great many black people in the top tier. I know, because I encounter them every day throughout my neighbourhood and I can guarantee you they don’t do any begging when they go into the banks and would be completely insulted at this ludicrous assertion.

The rich rule over the poor, and the borrower is slave to the lender. That’s a bible verse, and it means you’re not supposed to feel free and empowered when approaching a bank for money. Black or white, and every other hue, you are begging your banker to bind you in chains.

I didn’t even know you get black Banks….thought it was only Banks?…..me side ways!

What if we got rid of BANKS? (My opinion … it will happen over time … the time for DEFI is here…. )

What if 1 Blockchain replaced part of the services of a BANK?

==> The Cost of Transactions would come down significantly
==> BIG WIN for CONSUMERS and BUSINESS
==> Transactions done instantaneously

Thus is laughable when bitcoin costs what… 6%? “To transact” Keep dreaming.

You might be “transacting” with a scam.

You obviously in the wrong Crpyto!

Money knows no colour. But if I bank with the “white” bank am I, by default, racist?

Banks have never made their clients rich.
They aren’t your friends either. It is a business.

As soon as I see a bank being given a ‘race’ I lose interest. Get over yourself if you are so insecure that institutions like banks must now be racialized.

Good grief, even banking has come down to a race thing. Next we will be seeing black sanitaryware, appliances and bridal gowns so as to not offend!

I’m so sick and tired of the race related nonsense in SA.
Why a black bank? And not just a bank that’s better for consumers?

End of comments.

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