Banks Only! SARB keeps banking sector exclusive

SEKUNJALO has expressed its disappointment with the curators of Ubank after they said they would not be able to offer the Sekunjalo Consortium an opportunity to purchase Ubank.

SIZWE DLAMINI and BONGANI HANS

IN response to a formal letter of interest from Sekunjalo to acquire or recapitalise Ubank, the curator, KPMG, said they had been instructed by the SA Reserve Bank (SARB) to only sell Ubank to other banks.

“The Prudential Authority has advised the curator that, in the interest of the depositors of Ubank and given the capital position of Ubank, the Curator must undertake a bid process for the assets and liabilities of Ubank (in accordance with the provisions of section 54 of the Banks Act) and that only banks registered in terms of the Banks Act must be invited to bid for the assets and liabilities of Ubank, a substantial portion of which liabilities are deposits from the general public that can by law only be held by registered banks,” said KPMG’s Zola Beseti.

Sekunjalo had offered to immediately commit R250 million to Ubank’s recapitalisation and pledged to locally raise a further R250m.

Sekunjalo would also be a minority shareholder within the proposed consortium, putting the interests of the people at the forefront.

Sekunjalo said in a statement that it had written to SARB Governor Lesetja Kganyago to clarify the Bank’s position, who referred Sekunjalo back to the curator, in what can only be assumed as a pillar-to-post diversionary tactic.

The decision to refuse the Sekunjalo Consortium to purchase or recapitalise Ubank also appears to conflict with certain provisions of Section 54 of the Banks Act – Amalgamations, mergers, and arrangements, which allows for a person or an entity that is not a bank, to acquire bank assets in excess of 25 percent on condition that the Finance Minister has granted consent and such consent is conveyed to the Registrar.

Further, should the assets being transferred amount to less than 10 percent of the total assets on the bank’s balance sheet, then there is no other requirement except for the transferring bank (in this case Ubank) to notify the Registrar in writing beforehand.

Survé said: “This is extremely disappointing and worrying.

“Despite our best efforts to transform the banking sector and commit capital and resources to ensure that Ubank could be retained in the hands of workers such as NUM, it is patently clear SARB has no intention of allowing diversification of the banking industry.”

Beseti said if Sekunjalo did submit a binding offer to recapitalise Ubank, the curator would discuss such an offer with the SARB’s Prudential Authority and obtain its directives in relation to the offer.

“Time is of the essence and the intention is for the disposal process … to be concluded by 31 August 2022.”

However, Sekunjalo said it had appointed Vunani Capital as its corporate finance advisor on the Ubank acquisition.

“Vunani Capital has informed us that the curators’ position and SARB’s position is final in that they will not entertain an offer from Sekunjalo.”

He cautioned against allowing another black-owned bank to perish.

“It is our considered view that as part of the transformation objectives in the financial services sector, the country should not lose a bank which is black-owned.

“By all accounts transformation in the financial services sector, especially in the banking sector, is regrettably low and Ubank presents an opportunity to strengthen the inclusion of black people in the banking sector.”

NUM general secretary William Mabapa said Sekunjalo could not recapitalise Ubank because the curator had told NUM and Mineral Council representatives that it intended to choose a bank because that was the criteria, not to choose anyone who had an interest.

“I am sure there are (a lot of) people who have an interest … There may be more than 50 but what they told us is that the criteria are that they are only going to choose among the banks, they are not going to choose anybody who comes with money,” said Mabapa.

The decision to only have existing banks bid for Ubank has the effect of limiting competition in the banking sector and further consolidating what is already a limited offering to South African consumers and businesses.

“While we appreciate that this is still ostensibly a free market and that SARB can, to an extent, be selective as to who buys and operates Ubank, this disheartening decision to disallow a perfectly legitimate offer to save the bank continues to stall real transformation in the financial services industry.

“This is something that is long overdue and essential to the future of our democracy and the inclusion of our people to make a meaningful contribution to the economy. We hope that the curator and SARB rationalise and reconsider their position,” Sekunjalo said.

Outgoing commissioner for the Competition Commission Tembinkosi Bonakele recently raised concern about the commercial banks’ unwillingness to participate in diversifying the country’s economy. “I have always said that if the banks were doing what they were supposed to do they would be no need for the state bank.”

The Competition Commission’s “Measuring Concentration and Participation in the South African Economy: Levels and Trends Report” found that the banking sector was still dominated by “the big four”, namely Standard Bank, ABSA, FNB and Nedbank.

“Overall, the largest four banks combined constituted 89.9 percent in 2016 and 87.6 percent in 2019 in terms of assets under management.

“Investec and Capitec were the next largest banks in 2019 accounting for 8.4 percent and 2.1 percent of assets under management in 2019 respectively, with Capitec experiencing a small increase in its share over the 2016-2019 period.

“Tyme Bank and Discovery Bank entered the segment in November 2018 and July 2019 respectively.”

The report stated that, based on research into concentration among commercial banks in other countries, South Africa’s concentration ratio exceeded that of three other developing countries (Brazil, Russia and Nigeria) between 2016 and 2019, although both Brazil and Russia would be classified as highly concentrated and Nigeria as moderately concentrated based on their concentration ratios.

Sun, 14 Aug 2022 16:03:35 GMTSizwe Dlamini

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