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.
“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.
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?
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 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.
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.
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.
“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
|Standard Bank||1 624||1 271|
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: